Understanding Section 80D & Loss Setoff: Tax Benefits
Section 80D: Health Insurance Premium Deductions
Section 80D of the Income Tax Act, 1961, provides for a deduction in respect of health insurance premiums paid by an individual or a Hindu Undivided Family (HUF). Here are the provisions related to deduction under Section 80D:
Eligible Persons
The deduction is available to individuals and HUFs who pay health insurance premiums for themselves or their family members.
Eligible Payments
The deduction is available for payments made towards health insurance premiums for:
- Self
- Spouse
- Dependent children
- Parents (including dependent parents)
Maximum Deduction
The maximum deduction available under Section 80D is:
- ₹25,000 for individuals and HUFs who pay health insurance premiums for themselves or their family members (other than senior citizens)
- ₹50,000 for senior citizens (individuals aged 60 years or above)
Additional Deduction
An additional deduction of ₹25,000 is available for payments made towards health insurance premiums for parents (including dependent parents).
Mode of Payment
The payment of health insurance premiums must be made by any mode other than cash (e.g., cheque, credit card, online payment).
Limitations
The deduction under Section 80D is subject to the following limitations:
- The deduction is available only for payments made towards health insurance premiums.
- The deduction is not available for payments made towards other types of insurance (e.g., life insurance, motor insurance).
Setoff and Carry Forward of Losses
Here’s a short note on setoff and carry forward of losses:
Setoff of Losses
Setoff of losses refers to the process of adjusting losses against profits or gains from other sources in the same financial year. This is done to reduce the tax liability.
Carry Forward of Losses
Carry forward of losses refers to the process of carrying forward unadjusted losses to future years for setoff against profits or gains. This is done when losses cannot be fully adjusted in the same financial year.
Types of Losses
- Business losses (Section 72)
- Speculation losses (Section 73)
- Capital losses (Section 74)
Conditions for Carry Forward
- Losses must be genuine and not fictitious.
- Losses must be properly documented and recorded.
- Return of income must be filed on time.
Period of Carry Forward
- Business losses: 8 years
- Speculation losses: 4 years
- Capital losses: 8 years
Setoff and Carry Forward of Losses (Repeated)
Here’s a short note on setoff and carry forward of losses:
Setoff of Losses
Setoff of losses refers to the process of adjusting losses against profits or gains from other sources in the same financial year. This is done to reduce the tax liability.
Carry Forward of Losses
Carry forward of losses refers to the process of carrying forward unadjusted losses to future years for setoff against profits or gains. This is done when losses cannot be fully adjusted in the same financial year.
Types of Losses
- Business losses (Section 72)
- Speculation losses (Section 73)
- Capital losses (Section 74)
Conditions for Carry Forward
- Losses must be genuine and not fictitious.
- Losses must be properly documented and recorded.
- Return of income must be filed on time.
Period of Carry Forward
- Business losses: 8 years
- Speculation losses: 4 years
- Capital losses: 8 years