Quick Summary
The Income Tax Department has highlighted the major tax deductions available to taxpayers on payments made towards life insurance policies, health insurance premiums and medical treatment expenses under the Income-tax Act, 2025, as amended by the Finance Act, 2026. These provisions can help individuals and Hindu Undivided Families (HUFs) reduce their taxable income while securing financial protection for themselves and their families. The department has clarified that deductions available under
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FAQ :
Under Section 126 of the IT Act 2025, individuals and HUFs can claim deductions for health insurance premiums, contributions to notified health schemes, and preventive health check-ups. For senior citizens, medical expenditure is also covered if health insurance isn't available.
The deduction limit is up to £25,000 for premiums paid for self, spouse, and dependent children, and an additional £25,000 for parents. For senior citizens, the medical expenditure limit is £50,000, and preventive health check-ups are capped at £5,000.
Under Section 127, resident individuals and HUFs can claim a flat deduction of £75,000 for a dependent with a disability, or £1,25,000 for a dependent with a severe disability, provided prescribed conditions are met.
For the treatment of specified diseases, the deduction is the lower of the actual expenditure incurred or £40,000. For senior citizens, this limit increases to £1 lakh. Any reimbursement received must be deducted.
Yes, health insurance premiums must be paid through any mode other than cash to be eligible for deduction. However, expenses for preventive health check-ups can be paid in cash.
The overall deduction available under Section 123 for life insurance premiums and other specified investments is capped at £1.5 lakh.
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