Health Insurance Premium Deduction — Section 124

Health insurance premiums remain one of the most valuable deductions available to old-regime taxpayers — protecting your health and your tax bill at once. Under the new Act, this sits in Section 124, the direct successor to Section 80D.

Deduction Limits

Category

Maximum Deduction

Self, spouse, and children (below 60)

₹25,000

Self, spouse, and children (if the eldest is a senior citizen, 60+)

₹50,000

Parents (below 60)

Additional ₹25,000

Parents (senior citizens, 60+)

Additional ₹50,000

Preventive health check-up (within the above limits)

Up to ₹5,000

This means a taxpayer under 60 with senior citizen parents can claim up to ₹75,000 in total (₹25,000 for self/family + ₹50,000 for parents). If both the taxpayer and their parents are senior citizens, the maximum rises to ₹1,00,000.

What Qualifies

•             Health insurance premiums for self, spouse, dependent children, and parents (parents need not be dependent).

•             Preventive health check-up expenses — this portion can be paid in cash; the rest of the premium generally cannot be.

•             Contributions to the Central Government Health Scheme (CGHS) or similar notified schemes.

•             Medical expenditure on senior citizens who don’t have health insurance coverage, within the applicable limit.

Key Restriction: Mode of Payment

Health insurance premiums (other than the preventive check-up portion) must be paid through a non-cash mode — cheque, net banking, UPI, card, or similar. Cash payments for the premium itself will result in the deduction being denied.

Worked Example

A 35-year-old taxpayer pays ₹22,000 for a family floater policy covering themselves, spouse, and children, plus ₹35,000 for a senior citizen parent’s policy, and spends ₹4,000 on a preventive health check-up for the family.

•             Self/family: ₹22,000 + ₹3,000 (check-up, capped so total doesn’t exceed ₹25,000) = ₹25,000

•             Parents: ₹35,000 (within the ₹50,000 senior citizen limit)

•             Total deduction: ₹60,000

Frequently Asked Questions

Q1. Is this deduction available under the new tax regime? No — like most Chapter VIII/Schedule-based deductions, Section 124 is available only under the old tax regime.

Q2. Can I claim a deduction for my in-laws’ health insurance? No — the deduction covers only your own parents (and spouse/children), not your spouse’s parents, unless they are also your legal dependents in a specifically recognized manner.

Q3. What if I paid a lump-sum premium for a multi-year health policy? The premium is typically allowed to be spread proportionately over the number of years covered by the policy, subject to the annual limit for each year.

Limits reflect Tax Year 2026-27 under the old tax regime. Verify current caps each Budget, as they are periodically revised.