Section 126 — Deduction in respect of health insurance premia. Successor to s.80D of the 1961 Act.
Section 126 is in Chapter VIII — Deductions to Be Made in Computing Total Income, which runs from section 122 to section 154.
Sub-section (1) allows an individual or HUF a deduction of the sums worked out in sub-sections (2) to (8), paid in a mode permitted by sub-section (9), out of income chargeable in the tax year. For an individual, sub-section (2) gives four heads: health insurance for the assessee or his family, contributions to the Central Government Health Scheme or a notified scheme, and preventive health check-up, up to Rs. 25,000; the same for parents, up to Rs. 25,000; medical expenditure on the assessee or family, up to Rs. 50,000; and medical expenditure on a parent, up to Rs. 50,000. Sub-section (3) caps the preventive health check-up element within those limits at Rs. 5,000, and sub-section (4) caps each side — self-and-family, and parents — at Rs. 50,000 in aggregate. Sub-sections (5) and (6) give a HUF Rs. 25,000 for health insurance of any member and Rs. 50,000 for medical expenditure on any member, capped at Rs. 50,000 in aggregate. Sub-section (7) allows the medical expenditure limb for a senior citizen only where no health insurance has been paid for that person, and sub-section (8) substitutes Rs. 50,000 for Rs. 25,000 where the insured is a senior citizen and spreads a lump sum multi-year premium over the relevant tax years by an appropriate fraction. Sub-section (9) requires payment other than in cash except for preventive health check-ups, sub-section (10) defines family, appropriate fraction and relevant tax year, and sub-section (11) requires the insurance to be under a scheme of the General Insurance Corporation approved by the Central Government or of another insurer approved by the irda.
It subsidises the cost of health cover and, where no cover exists for a senior citizen, of actual medical spending, for the assessee, his family and his parents. The cash bar in sub-section (9) and the approved-scheme requirement in sub-section (11) are there to keep the claim verifiable.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Health insurance, cghs or notified scheme contribution and preventive check-up for self and family | Rs. 25,000 | In aggregate for an individual; substituted by Rs. 50,000 where the person insured is a senior citizen | Sub-section (2)(a), read with sub-section (8)(a) |
| Health insurance and preventive check-up for parents | Rs. 25,000 | In aggregate; substituted by Rs. 50,000 where the parent insured is a senior citizen | Sub-section (2)(b), read with sub-section (8)(a) |
| Medical expenditure on the assessee or a member of his family | Rs. 50,000 | In aggregate, and only where the person is a senior citizen for whom no health insurance premium has been paid | Sub-section (2)(c), read with sub-section (7) |
| Medical expenditure on a parent | Rs. 50,000 | In aggregate, and only where the parent is a senior citizen for whom no health insurance premium has been paid | Sub-section (2)(d), read with sub-section (7) |
| Preventive health check-up element | Rs. 5,000 | In aggregate, within the limits under sub-section (2)(a) and (b); this is the only payment that may be made in cash | Sub-section (3), read with sub-section (9)(a) |
| Overall cap on the self-and-family side, and separately on the parents side | Rs. 50,000 | Aggregate of sub-section (2)(a) and (c) on one side, and of (2)(b) and (d) on the other | Sub-section (4) |
| Health insurance for any member of a Hindu undivided family | Rs. 25,000 | In aggregate; Rs. 50,000 where the member insured is a senior citizen | Sub-section (5)(a), read with sub-section (8)(a) |
| Medical expenditure on any member of a Hindu undivided family | Rs. 50,000 | In aggregate, and only where the member is a senior citizen with no health insurance in force | Sub-section (5)(b), read with sub-section (7) |
| Overall cap for a Hindu undivided family | Rs. 50,000 | Aggregate of sub-section (5)(a) and (b) | Sub-section (6) |
| Spread of a lump sum premium covering more than one year | Appropriate fraction — one divided by the total number of relevant tax years | Relevant tax years being the year of payment and the subsequent years during which the insurance remains in force | Sub-section (8)(b), read with sub-section (10)(a) and (c) |
Pay by a non-cash mode for everything except the preventive health check-up — sub-section (9) makes cash payment fatal to the claim in every other case. The medical expenditure limbs are not a general medical bill deduction: sub-section (7) allows them only for a senior citizen for whom no health insurance premium has been paid, so buying cover for a parent and claiming his medical bills as well does not work. A multi-year premium paid in one go is not deductible in full in the year of payment; sub-section (8)(b) spreads it by the appropriate fraction across the years the cover runs. The two sides are separate baskets — up to Rs. 50,000 for self and family, and up to Rs. 50,000 for parents — but each is a combined cap on insurance and medical expenditure together.
An individual pays Rs. 24,000 of health insurance premium for himself, his spouse and his dependant children and Rs. 6,000 on preventive health check-ups for the same family. Sub-section (3) first cuts the check-up element to Rs. 5,000, and sub-section (2)(a) then caps that whole limb at Rs. 25,000 in aggregate — so Rs. 30,000 spent yields a deduction of Rs. 25,000. If he also pays Rs. 40,000 of medical expenditure for a senior citizen father, that limb is open under (2)(d) only because no premium was paid to insure the father (sub-section (7)), and the parents' side is separately capped at Rs. 50,000 by sub-section (4) — the two sides are not pooled. Had he paid the Rs. 24,000 premium in cash, sub-section (9)(b) would have destroyed that claim entirely; the check-up is the only payment cash is allowed for.
In the deductions schedule of the return of income and in any intimation or assessment testing the claim, supported by the insurer's premium receipt or the Central Government Health Scheme contribution record. Sub-section (11) means the policy itself must be under a scheme of the General Insurance Corporation of India approved by the Central Government or of an insurer approved by the Insurance Regulatory and Development Authority.
where the amount is paid on account of medical expenditure incurred on the health of a senior citizen under sub-section (2)(c) or (d) or (5)(b), deduction shall be allowed, if no amount has been paid to effect or to keep in force the health insurance of such person
See the full 1961 to 2025 concordance.
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