80D- Key deduction for good financial planning

80D- Key deduction for good financial planning (For Beginners like me) 

(A) 80C+80CCD+80CCE V/s 80D

* When it comes to financial planning the first thing that strikes in our mind is 80C deductions like PPF, NSC , Tax saver F.D. or L.I.P. The main reason for that is the large amount  involved with  80C deduction i.e.  Rs 100000 (now1.20 Lac with the introduction of Infrastructure bonds) and therefore we somehow neglect an another very important aspect i.e. Medical Insurance.

*I am  not saying that people don't take medical insurance but according to me they don't have complete knowledge about it. They take it just to satisfy themselves that yes we have a medical cover. But in reality they don't able to take full advantage of this key investment neither in tax planning nor in terms of claim nor in insurance  cover.

*I will deal with the details of  Sec. 80 D in this part and essentials of good Medical/Health  insurance plan in next part. 

(B) Important points related with 80D

(1) Eligibility - Individual and H.U.F.

(2)Individual V/s H.U.F. -

 In case an individual, the medical insurance policy can be taken in the name of any of the following: the taxpayer or the spouse, parents or dependent children of the taxpayer.

• In case a HUF , the medical insurance policy can be taken in the name of any member of the family.
• (3) Mode of Payment - Any mode other than cash
• (4) Scope -  Health Insurance Premium paid under a scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority (IRDA).
• Some of the companies approved by IRDA are :- 
  
  
•   New India Assurance

   United India Insurance

   ICICI Lombard

   Tata AIG

   Royal Sundaram

   Star Allied Health Insurance

   Cholamandalam DBS

   Bajaj Allianz Apollo

•  

  • (C) Inclusion V/s Exclusion
    
    
  •  
  • * Children above 18 years, if employed, can not be covered.
    
    
  • * Male children, if not employed, but a bonafide student can be covered upto age of 25 years. 
    
    
  • * Female children, if not employed, can be covered until the time she is married.
  • * Parents need not to be dependent on the Assessee.
  • * Parents of Individual or Spouse both are covered.
  •  
  • (D) Amount of Deduction
  •  
  • Individual - Well two types of deduction is provided to him . One his on the premium paid for the medical cover of himself,spouse and children and an additional deduction on payment of premium for parents (both dependents and non-dependents)
  • Basic - 15000 + 5000 (extra if anyone is senior citizen)
  • Additional - for medicalim policy of parents 15000 + 5000 extra (if they are senior citizen)

   

  INSERT (AY 2008-09) Additional deduction of15,000 under Section 80D is allowed to an individual who pays medical insurance premium for his/ her parent or parents.

   

  (E) Why deduction U/s 80 D is granted ??

  In case of a sudden illness or accident, the health insurance policy takes care of the hospitalization, medical and other costs incurred.. So govt. wants us to take this seriously and that's why it has included Sec. 80 D in I.Tax Act 

  With this I conclude my article and hopefully I have answered all the important question related to Sec. 80D. This is my 1st article on my fav. subject I.tax and people here on CCI know me for my inspirational articles. I hope they will give love to this article just like my other works.

  Source - 80 % of this article is my own write-up along with headings and phrases used. Rest 20% of the technical part is the result of research with the help of I.tax websites.

  My next part will deal with essentials of good Medical/Health  insurance plan

  Link of second part

   Essentials of Health Policy or good Medical Insurance

  Regards

  Pulkit Gupta

  pulkit_1988 @ rediffmail.com