Question 5 (c)
Short note: deduction for health insurance premium and medical expenditure under section 80D (as set, 1961 Act, AY 2022-23)
5.5 marks
- Time to write
- About 11 minutes
From an older CBCS paper
Question
Question 5 (c) · 5.5 marksWrite short notes on any two of the topics given below:
- Deduction under section 80D.
Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2022-23 (previous year 2021-22), with the dates as printed. No marks are printed for this part; 5.5 inferred (two of four notes carry 11 marks).
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- any twoThe paper asks for any 2, and this is one of them. Only 2 are marked: a third earns nothing.
- section 80DThe section is named: open with what it says, then explain or apply it.
- short notesA note opens with the meaning, then two or three key points. No long introduction.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Who can claim and the two limits 2 marks 3 min
- 2 Senior citizens, medical expenditure, check-up 1½ marks 2 min
- 3 Mode of payment and other points 1 mark 2 min
- 4 Example 1 mark 2 min
- Check: every ask answered, key terms underlined 1 min
Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks. End with step 4 in a line or two.
Try it first. About 11 minutes for 5.5 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
An individual or a Hindu undivided family may deduct from gross total income certain health payments made in the previous year out of income chargeable to tax (section 80D(1)).
2. What qualifies, and the limits
For an individual, the deduction is the total of two separate limits (section 80D(2)):
| For | What qualifies | Limit | If the person is a senior citizen |
|---|---|---|---|
| Himself, spouse and dependent children | health insurance premium, contribution to the Central Government Health Scheme or another notified scheme, and preventive health check-up | ₹25,000 | ₹50,000 |
| Parents (dependent or not) | health insurance premium and preventive health check-up | ₹25,000 | ₹50,000 |
- A senior citizen means an individual resident in India aged 60 or more at any time in the year; the higher limit applies where the premium is for such a person (section 80D(4)).
- Medical expenditure for a senior citizen with no health insurance: medical expenditure on the assessee or his family, or on a parent, qualifies within the same ₹50,000 limits, provided no premium is paid for that person (section 80D(2)(c) and (d) and the provisos).
- Preventive health check-up: within the limits above, at most ₹5,000 in all (section 80D(2A)).
- Hindu undivided family: premium for any member up to ₹25,000 (₹50,000 for a senior citizen) and medical expenditure on a senior-citizen member with no insurance, up to ₹50,000; premium and medical expenditure together are capped at ₹50,000 (section 80D(3) and its proviso).
The payment must be made otherwise than in cash, except for a preventive health check-up, which may be paid in cash (section 80D(2B)).
- A premium paid in one lump sum for a policy of more than one year is spread equally over the years of cover (section 80D(4A)).
- A premium the employer pays to insure an employee's health under a scheme approved by the Central Government or the IRDA for section 36(1)(ib), or the employer's payment of a premium the employee pays under a scheme so approved for section 80D, is not a perquisite (clauses (iii) and (iv) of the proviso to section 17(2)); a premium the employer pays directly is not paid by the employee, so it gives him no deduction under section 80D.
- If the individual opts for section 115BAC, the deduction is not available (section 115BAC(2)(i), Finance Act, 2020, section 53). The option counts only if exercised in the prescribed manner: with the section 139(1) return by a person with no business or professional income, or on or before the section 139(1) due date by one who has such income, whose option then holds for later years and can be withdrawn only once (section 115BAC(5)).
Example (our own): Mr. Kumar, 45, pays by cheque a premium of ₹28,000 for himself and his wife, aged 42, ₹4,000 in cash for a health check-up of himself, and a premium of ₹55,000 for his father, a resident aged 70. Deduction: for the family, ₹25,000 (the ₹28,000 premium already exceeds the limit, so the check-up adds nothing); for the father, ₹50,000. Total ₹75,000.
Where the 5.5 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Who can claim and the two limits | 2 |
| 2 | Senior citizens, medical expenditure, check-up | 1.5 |
| 3 | Mode of payment and other points | 1 |
| 4 | Example | 1 |
| Total | 5.5 |
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