Section 80D
Also written 80D · Section 80D deduction · Medical insurance premium deduction
The income-tax deduction for medical insurance premiums paid for yourself, your spouse, your dependent children and your dependent parents — the workbook does not state a rupee ceiling.
In plain language
Section 80D rewards you for buying health cover. It lets you subtract the premium you pay for medical insurance from the income tax computes your tax on.
The workbook's own list of who you can insure and still claim the deduction is short: yourself, your spouse, your dependent children and your dependent parents. Buy a policy for any of them, and the premium can reduce your taxable income.
This is a different section from Section 80C. Section 80C rewards saving and investing. Section 80D rewards buying insurance against a medical bill.
How it works
Chapter 10's table gives the rule in one line: individuals are eligible to claim deductions for medical insurance availed for self, spouse, dependent parents and dependent children.
The workbook does not give a rupee ceiling for Section 80D in this booklet — no maximum premium, and no separate limit for a senior citizen parent. It states only who the premium can cover. Where a fact is missing from the source, the honest answer is that the source does not give it, not a guess at what the ceiling might be elsewhere.
A worked example
Amounts are illustrative — the workbook gives no ceiling to size this example against.
Rajesh, in Nagpur, pays two medical insurance premiums in one year: Rs 18,000 for a family floater policy covering himself, his wife and their two children, and Rs 22,000 for a separate policy covering his father, who depends on him. Both premiums fall within the workbook's list of eligible relationships — self, spouse, dependent children and dependent parents — so both are claimable under Section 80D, each subject to whatever the current law's own numeric ceiling is.
His colleague Meena pays a premium for her married, financially independent brother's health policy. A sibling does not appear in the workbook's list of eligible relationships, so that premium earns her nothing under Section 80D — however much she paid, and however genuinely she believes in the cover.
Why NISM asks about it
Chapter 10 (Tax Saving Options) tabulates Section 80D immediately after 80CCD(1B) and before 80G, in the same table that carries Section 80C. Expect a question that lists relationships — spouse, dependent parent, sibling, adult independent child — and asks which qualify for an 80D deduction. Self, spouse, dependent children and dependent parents qualify; nobody else does, in the workbook's own wording.
Common exam traps
- A sibling, an independent adult child or a friend does not qualify. The workbook's list is self, spouse, dependent children and dependent parents only.
- Section 80D is for medical insurance premium; Section 80C is for savings and investment products. A candidate who lumps the two together loses an easy mark.
- The workbook gives no rupee ceiling for this deduction in this booklet. Do not import a limit from outside the text; the safe exam answer is the list of eligible relationships, not a figure the source does not state.
- The dependency test matters: a parent or child who is not financially dependent falls outside the workbook's wording, in the same way Section 80C's NPS and ELSS entries have their own separate conditions.
Check yourself
1.Section 80D allows a deduction for medical insurance availed for whom?
- a)Self only
- b)Self, spouse, dependent parents and dependent children
- c)Any relative, whether dependent or not
- d)Employees of the taxpayer
Show the answer
Answer: (b) Self, spouse, dependent parents and dependent children
"Individuals are eligible to claim deductions for MEDICAL INSURANCE availed for SELF, SPOUSE, DEPENDENT PARENTS AND DEPENDENT CHILDREN." Four categories, and the word dependent attaches to parents and children — it is not a general permission to insure any relative, which disposes of option (c). The inclusion of dependent parents matters more than the deduction itself in Indian households: Chapter 6 showed that an elderly parent is simultaneously the hardest person to insure commercially and the most likely to need cover. Note the scope of the section: it is for medical insurance, the premium, rather than for medical expenditure at large. Chapter 6 explains why a tax benefit attaches at all — insurance is "risk management" against "significant potential losses and financial hardship", and the system nudges households to buy protection rather than absorb a hospital bill from savings.
2.What is distinctive about the deduction under Section 80CCD(1B)?
- a)It replaces the deduction available under Section 80C
- b)It is available for investment in NPS and is over and above the amount available under Section 80C
- c)It applies only to salaried employees
- d)It covers medical insurance premiums
Show the answer
Answer: (b) It is available for investment in NPS and is over and above the amount available under Section 80C
"IN ADDITION TO DEDUCTION CLAIMED UNDER SECTION 80C. Investment in NPS by ANY INDIVIDUAL is available for claiming deduction under Section 80CCD(1B) of the IT Act. Amount available for deduction under this section is OVER AND ABOVE the amount available for claiming deduction under Section 80C of IT Act." No other entry in the chapter is described that way, which makes NPS the only item counted twice — once inside the crowded 80C basket and again separately here. That matters in practice: a household whose 80C is already filled by housing loan principal and provident fund contributions should claim its NPS contribution where it competes with nothing. Option (c) is contradicted by the words "any individual", and option (d) describes Section 80D, which covers "medical insurance availed for self, spouse, dependent parents and dependent children."
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Term insuranceLife cover for a fixed period: if you die during the term your nominee receives the sum assured, and if you survive it nothing is paid back. It is the cheapest way to buy protection.
- Health insuranceInsurance that covers an insured person's medical and surgical expenses, regulated in India by the Insurance Regulatory and Development Authority of India (IRDAI).
- Section 80CThe income-tax deduction for money put into life insurance, provident fund, ELSS, five-year bank deposits, NPS Tier 1, NSC and home-loan principal, capped in aggregate at Rs 1,50,000 a year.
- Previous yearUnder the Income Tax Act, 1961, the year in which income is earned. It is taxed in the following assessment year; each runs from 1 April to 31 March.