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nism-series-xa-health-insurance-section-80d-deductions[ INVESTMENT ADVISER (LEVEL 1) ]

Under Section 126 of the Income-tax Act, 2025 (the erstwhile Section 80D of the Income-tax Act, 1961), what is the maximum deduction an individual (aged below 60) can claim for medical insurance premiums paid for self/family (₹25,000) plus senior citizen parents aged 60+ (₹50,000)?

[ A ]Up to ₹1,50,000 (Section 123 limit (the erstwhile Section 80C)).

[ B ]Up to ₹25,000 total across all family members.

[ C ]Health insurance premiums are completely non-deductible.

[ D ]Up to ₹75,000 per financial year (₹25,000 for self/family + ₹50,000 for senior citizen parents, including up to ₹5,000 for preventive health checkups).[ CORRECT ]

Takeaway

Option D is correct: Up to ₹75,000 per financial year (₹25,000 for self/family + ₹50,000 for senior citizen parents, including up to ₹5,000 for preventive health checkups).

Derivation

Section 126 of the Income-tax Act, 2025 (the erstwhile Section 80D of the Income-tax Act, 1961) treats the taxpayer's own family and their parents as two entirely separate deduction buckets, each with its own ceiling. For self/family where the taxpayer is below 60, the cap is ₹25,000; for parents aged 60 and above, a higher ₹50,000 cap applies in recognition of typically larger senior-citizen medical costs. Adding the two: ₹25,000 + ₹50,000 = ₹75,000 total for this taxpayer's situation. A sub-limit of up to ₹5,000 for preventive health checkups is available within (not in addition to) these overall ceilings. Had both the taxpayer and their parents been 60 or above, the combined ceiling would rise further to ₹1,00,000 — a variant the exam sometimes tests as a follow-up trap.

Why the others fail

A — Up to ₹1,50,000 (Section 123 limit (the erstwhile Section 80C)).

₹1,50,000 is the unrelated Section 123 ceiling (the erstwhile Section 80C) covering instruments like PPF and ELSS; Section 126 (the erstwhile Section 80D) operates under its own separate, much smaller limits.

B — Up to ₹25,000 total across all family members.

Ignores the independent additional deduction available for senior citizen parents, which adds a further ₹50,000 on top of the ₹25,000 self/family limit.

C — Health insurance premiums are completely non-deductible.

Section 126 (the erstwhile Section 80D) explicitly permits deductions for health insurance premiums and preventive checkups; it does not disallow them entirely.