ITR Filing: Deductions On Medical Expenses For Senior Parents Under Section 80D Explained

Anil is a Delhi-based salaried IT professional who supports his elderly parents. His father, 65, and mother, 63, do not have health insurance due to pre-existing medical conditions that made it difficult to obtain affordable coverage. Over the year, Anil spent around Rs 45,000 on his father’s medical treatments, including consultations, medicines, and diagnostic tests, and Rs 30,000 on his mother’s healthcare needs. As the deadline for filing income tax returns is just a day away, Anil is busy filing his ITR and will be claiming deductions for the expenses.

Let’s first understand how he can claim these deductions:

Among the various deductions available under the Income Tax Act, Section 80D stands out as a significant provision, especially for those with senior citizen parents. This section offers deductions for health insurance premiums and medical expenditures incurred on senior citizens. Understanding Section 80D can lead to substantial tax savings for you.

What is Section 80D?

Section 80D of the Income Tax Act, 1961, allows taxpayers to claim deductions for the premiums paid on health insurance policies for themselves, their spouse, children, and parents. The deduction limits vary based on the age of the insured individuals, with special considerations for senior citizens.

For taxpayers, the term “senior citizen” refers to individuals aged 60 years or above. Section 80D also makes provisions for “super senior citizens,” individuals aged 80 years or above. Notably, the benefits extend beyond just insurance premiums to include medical expenditures, particularly for senior citizens who may not have health insurance coverage.

Taxpayers should know that this deduction can be claimed if an individual or HUF chooses to pay taxes under the old tax regime.

Deduction On Medical Expenses for Senior Citizens

For senior citizens, managing healthcare costs can be challenging, with medical expenses often constituting a significant portion of their monthly budget. The same can be said for individuals looking after their parents. Recognising this, the government provides a tax deduction for medical expenses incurred on senior parents or by senior citizens themselves who are not covered under any health insurance policy.

Deduction Limit:

Under Section 80D, a taxpayer can claim a deduction of up to Rs 50,000 for the medical expenses incurred on behalf of a senior citizen parent. The deduction amount is the same for each parent, meaning if both parents are senior citizens without insurance, the potential deduction could be up to Rs 1,00,000 (Rs 50,000 per parent).

You can also claim an extra deduction of Rs 5,000 for preventive health check-ups. This claim has to be within the overall limit of Rs 25,000/Rs 50,000, as the case may be.

Please note: This is applicable only if the parent is not covered by any health insurance plan.

To avail of this deduction, taxpayers must take note of the following eligibility criteria:

1. Age of Parents: The parent must be a senior citizen, aged 60 years or above, during the financial year.

2. No Health Insurance Coverage: The deduction is only available if the senior citizen parents do not have any health insurance coverage.

3. Documentary Evidence: Cash payments are not accounted for deductions under this section, therefore it is essential to maintain proper records and receipts of the medical expenses incurred. These should be documented and readily available in case of any verification by the Income Tax Department.

For Anil, the burden of these expenses is lightened by Section 80D, which allows him to claim a deduction of Rs 45,000 for his father and Rs 30,000 for his mother. This reduces his taxable income by a total of Rs 75,000, resulting in significant tax savings.

As healthcare costs continue to rise, the ability to claim deductions for these expenses offers not only financial relief but also a sense of security. For taxpayers like Anil, who is looking after his elderly parents, understanding and utilising these tax provisions can significantly reduce the financial burden.