The government can take a big step regarding health insurance in the upcoming budget. In fact, the deduction limit under Section 80D of the Income Tax Act, 1961 for health insurance premium was last increased from INR 15,000 to INR 25,000 in Budget 2015, 9 years ago. There has been no increase in this limit since the year 2015.
In such a situation, there is clearly apprehension about a possible increase in the deduction under Section 80D for health insurance premium in the budget. Experts believe that health insurance premiums have increased significantly in the last few years, and the current limit does not provide adequate deduction against premium payments for a large number of policyholders.
What are the provisions of Section 80D?
Under the current provisions of Section 80D, individuals below the age of 60 can claim a deduction of up to INR 25,000 on health insurance premiums paid for themselves, their spouses and children. An additional deduction of INR 25,000 is available on health insurance premium paid for parents below the age of 60, which increases to INR 50,000 if the parents are senior citizens. This provision also includes a deduction of INR 5,000 for preventive health check-ups within the full limit.
Despite these deductions, the rising costs of healthcare and insurance premiums have made these limits inadequate. The COVID-19 pandemic has underscored the need for robust health insurance coverage. Due to COVID, many families were facing financial stress due to high medical expenses. The increase in the deduction limit will provide great relief to taxpayers and encourage more people to invest in health insurance plans.
According to experts, the deduction limit should be increased from INR 25000 to INR 50000. The deduction limit for premiums paid for parents should be increased to INR 75,000, while for senior citizens this limit should be increased to INR 1 lakh. If the government increases the deduction limit, it will encourage many people to take health insurance, reduce the financial burden on taxpayers and ensure adequate health coverage.
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