How to make the most of Section 80D

Section 80D is one of the more generous deductions available to individuals, and one of the most under-used, mainly because people don't realise the limits stack across who you're insuring.

The deduction stacks

There's a limit for premiums covering you, your spouse and dependent children, and a separate additional limit for premiums you pay for your parents. That second limit is higher when your parents are senior citizens. Insuring your parents can therefore reduce your tax bill on top of your own policy's deduction, not instead of it.

Preventive health check-ups count

A portion of the limit can be used for preventive health check-ups for your family. It's a small allowance, and unusually it can be paid in cash, unlike premiums themselves, which must be paid in a non-cash mode to qualify.

Practical points that trip people up

• Pay premiums by a traceable method, cash payments for premiums don't qualify.
• Keep the premium receipts; the deduction is claimed against them.
• These deductions are generally available under the old tax regime. If you've opted for the new regime, check before assuming you can claim.
• Limits and rules change with each Union Budget, confirm the current year's figures before filing.

A word of caution

Tax relief is a genuine benefit, but it's a poor reason on its own to buy a policy. Buy the cover your family actually needs, then claim the deduction you're entitled to. Choosing a worse policy for a slightly better deduction is a bad trade every time.

We explain how your cover interacts with tax, but we're not tax advisers, for filing decisions, please speak to a qualified professional.

This guide is general information to help you understand your options, not financial or tax advice. Please consider your own circumstances and consult a qualified professional where needed.