Chapter VIII - Deductions to be Made in Computing Total Income
Section 126
Section 126: deduction for health insurance premium
Section 126 is the Income-tax Act, 2025's version of the deduction long known as "80D". Subject to its conditions, it covers health insurance, preventive health check-ups and medical expenditure for an uninsured senior citizen. An individual or HUF taxed under the default new regime in Section 202(1) cannot claim this deduction because Section 202(2)(a)(xii) excludes it.
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Need advice on Section 126?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) An assessee, being an individual or a Hindu undivided family, shall be allowed a deduction of a sum as specified in sub-sections (2) to (8), payment of which is made by any mode as specified in sub-section (9), out of his income chargeable to tax in the tax year.
(2) In the case of an assessee, being an individual, the sum referred to in sub-section (1), shall be the aggregate of the whole of the amount paid— (a) to effect or keep in force an insurance on the health (herein referred to as health insurance) of the assessee or his family, or any contributions made to the Central Government Health Scheme or such other scheme, as may be notified by the Central Government in this behalf, or any payment made for preventive health check-up of the assessee or his family, up to ₹25000 in aggregate; (b) to effect or to keep in force the health insurance, or any payment made for preventive health check-up, for the parent or parents of the assessee, up to ₹25000 in aggregate; (c) on account of medical expenditure incurred on the health of the assessee or any member of his family, up to ₹50000 in aggregate; and (d) on account of medical expenditure incurred on the health of any parent of the assessee, up to ₹50000 in aggregate.
(3) The deduction in respect of amounts referred to in sub-section (2)(a) or (2)(b), which are paid on account of preventive health check-up, shall be allowed up to ₹ 5000 in aggregate.
(4) The amount of sum referred to in sub-section (2) shall not exceed ₹ 50000 in aggregate of the sum specified under sub-section (2)(a) and (c) or aggregate of the sum specified under sub-section (2)(b) and (d).
(5) In the case of an assessee, being a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the whole of the amount paid–– (a) to effect or keep in force an insurance on the health of any member of such Hindu undivided family, up to ₹25000 in the aggregate; and (b) on account of medical expenditure incurred on the health of any member of such Hindu undivided family, up to ₹50000 in the aggregate.
(6) The amount of sum under sub-section (5) shall not exceed ₹50000 in the aggregate of the sum specified under sub-section (5)(a) and (b).
(7) For the purposes of this section, 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.
(8) Where the sum specified in sub-section (2)(a) or (b) or (5)(a) is paid to effect or keep in force the health insurance of any person specified therein, and— (a) such person is a senior citizen, the amount of sum as provided in such clauses, shall be substituted with ₹50000 for ₹25000; and (b) such sum is paid in lump sum in the tax year for more than a year, a deduction shall be allowed for each of the relevant tax year equal to the appropriate fraction of such amount.
(9) For the purposes of deduction under sub-section (1), the payment shall be made by any mode,— (a) including cash, in respect of any sum paid on account of preventive health check-up; or (b) other than cash in all other cases not falling under clause (a).
(10) For the purposes of this section,— (a) “appropriate fraction” means the fraction where the numerator is one, and the denominator is the total number of relevant tax years; (b) “family” means the spouse and dependant children of the assessee; (c) “relevant tax year” means the tax year beginning with the tax year in which such lump sum amount is paid and the subsequent tax year or years during which the health insurance remains in force.
(11) The health insurance referred to in this section shall be as per the scheme made in this behalf by— (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999.
Introduction
Section 126 permits an individual or HUF to deduct specified health-insurance, preventive-check-up and medical expenses. The eligible family member, age, payment method and separate statutory limits must be tested for each component.
Key takeaways
Health cover and eligible care
An individual or Hindu undivided family may deduct qualifying health-insurance premiums; the section also covers specified preventive check-ups and senior-citizen medical expenditure within its separate limits.
Payment mode
Cash is permitted for a preventive health check-up, but other qualifying payments must be made by a mode other than cash.
Senior-citizen medical expense
The medical-expenditure route requires that no health-insurance premium was paid for that senior citizen.
What qualifies, and the limits
For an individual, Section 126(2) allows four separate buckets of payment, each with its own cap:
| Payment for | Cap |
|---|---|
| Health insurance / CGHS contribution / preventive check-up - self or family | ₹25,000 (₹50,000 if a senior citizen) |
| Health insurance / preventive check-up - parent(s) | ₹25,000 (₹50,000 if parent is a senior citizen) |
| Medical expenditure on a senior-citizen self/family member with no health insurance paid for that person | ₹50,000 in aggregate, combined with the self/family insurance row above |
| Medical expenditure on a senior-citizen parent with no health insurance paid for that parent | ₹50,000 in aggregate, combined with the parent insurance row above |
Key conditions
- Within the self/family and parent buckets, preventive health check-up payments are capped at ₹5,000 in aggregate - they don't get an additional limit on top of the ₹25,000/₹50,000 figure.
- "Family" for this section means the assessee's spouse and dependant children only - it does not extend to parents, who are covered separately.
- The medical-expenditure route under Section 126(7) applies only to a senior citizen for whom no amount was paid to effect or keep health insurance in force.
- For a Hindu Undivided Family, the deduction covers health insurance for a member of the HUF (normally capped at ₹25,000, increased to ₹50,000 where the insured member is a senior citizen). It also covers medical expenditure up to ₹50,000 for an uninsured senior-citizen member. The combined HUF cap is ₹50,000 under Section 126(6).
- Preventive health check-up payments may be made in cash; every other payment under this section must be made by a mode other than cash to qualify.
- Section 202(2)(a)(xii) excludes this deduction for an individual or HUF taxed under the default Section 202(1) regime.
Build a person-by-person schedule
Separate payments for the assessee and family from payments for parents. Record ages and whether a qualifying policy exists before applying the relevant ceiling and payment-mode rule.
Step-by-step flow for applying Section 126
- 1
Is the assessee an individual or a HUF, and is the deduction available under its tax regime?
- No: No deduction under Section 126.
- Yes: Go to the next step.
- 2
Sort each payment by person
For an individual: self and family (spouse and dependant children) in one group, parents in another. For a HUF: its members.
- 3
Classify each payment
Health insurance (or CGHS/notified scheme contribution for self and family), preventive health check-up (sub-limit ₹5,000 in aggregate) or medical expenditure. For a senior citizen, medical expenditure counts only if no health insurance was paid for that person.
- 4
Was payment made by a permitted mode?
- Cash for anything other than preventive check-up: That payment does not qualify.
- Permitted mode: Go to the next step.
- 5
Apply the limits
Insurance limit ₹25,000 (₹50,000 for a senior citizen); medical expenditure up to ₹50,000; and each group (self/family, parents, or HUF) capped at ₹50,000 in aggregate. Spread a multi-year lump-sum premium by the appropriate fraction.
Practical checklist
Do
- Keep premium receipts, insured-person details, age proof and proof of payment mode.
- Separate preventive check-up and qualifying senior-citizen medical expenditure from insurance premium.
Avoid
- Do not apply one undifferentiated ceiling to family and parents.
- Do not assume every cash payment qualifies; test subsection (9).
Illustrative example
Worked example: self, family and senior-citizen parents
Hypothetical facts (illustration only, not a real taxpayer): Mr. Rao, an individual who has opted out of the default regime, pays by bank transfer a health insurance premium of ₹22,000 for himself, his wife and their dependant children, and ₹6,000 in cash for a family preventive health check-up. For his mother, a senior citizen, he pays a premium of ₹20,000 by card. His father, also a senior citizen, has no health insurance; Mr. Rao pays ₹60,000 of his medical bills by card.
Self and family
Check-up limited to ₹5,000 (cash is allowed for it). ₹22,000 + ₹5,000 = ₹27,000, capped at ₹25,000.
Mother's premium
₹20,000 is within the ₹50,000 limit that applies because she is a senior citizen.
Father's medical expenditure
Allowed because no insurance was paid for him; ₹60,000 is limited to ₹50,000.
Parents' group cap
₹20,000 + ₹50,000 = ₹70,000, limited to ₹50,000 under Section 126(4).
Outcome
- Total deduction = ₹25,000 + ₹50,000 = ₹75,000.
- Had the father's medical bills been paid in cash, they would not qualify, since only preventive check-up payments may be made in cash.
Glossary
- Preventive health check-up
- A health screening payment included in the section subject to its specific limits.
- HUF
- Hindu undivided family, one of the eligible claimant categories.
Frequently asked questions
Is Section 126 the same as what people call "80D"?
It covers the same idea - health insurance premium and related medical costs for self, family and parents - but under the Income-tax Act, 2025 it is numbered Section 126, not 80D.
Can I claim both insurance premium and medical expenditure for the same person?
No. Section 126(7) allows the medical-expenditure deduction only for a senior citizen for whom no health insurance premium was paid during the year.
What is the maximum possible deduction under Section 126?
For an eligible individual outside the default Section 202(1) regime, up to ₹1,00,000 in a year is possible: ₹50,000 for self/family where a senior citizen is covered plus ₹50,000 for senior-citizen parents. A HUF has a separate combined cap of ₹50,000 under Section 126(6).
Can I pay the preventive health check-up amount in cash?
Yes - it is the one payment under this section that is specifically allowed to be made in cash; all other payments must be non-cash.
How is a premium paid in one lump sum for several years treated?
Under Section 126(8)(b), the deduction for each relevant tax year is an equal fraction of the lump sum (one divided by the number of years the cover remains in force). For example, a ₹45,000 premium paid upfront for three years gives ₹15,000 per tax year, subject to the annual limits.
Need help applying this provision to your situation?
Plan your Section 126 health insurance deductions with our tax teamLast updated 10 October 2026