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Section 126 Income Tax Act 2025: How Much Health Insurance Deduction Can You Claim?

Section 126 permits eligible individuals and Hindu undivided families (HUFs) to deduct qualifying health insurance premiums and certain health-related payments from taxable income, subject to conditions and limits.

Applicable law: Section 126, Income-tax Act, 2025, Chapter VIII. This provision broadly corresponds to Section 80D of the Income-tax Act, 1961. The availability of the deduction depends on the tax regime and the law applicable to the relevant tax year.

Who is eligible under Section 126?

Under Section 126(1), an individual or Hindu undivided family may claim qualifying amounts paid out of income chargeable to tax during the tax year. Individuals can claim for themselves, their family and parents within separate statutory categories. HUFs can claim for their members.

What are the Section 126 deduction limits?

Eligible payment	Ordinary limit	Senior citizen provision
Individual, spouse and dependent children: insurance, eligible government health scheme contribution or preventive check-up	Rs 25,000	Insurance ceiling increases to Rs 50,000 where the insured person is a senior citizen
Parent or parents: insurance and preventive check-up	Rs 25,000	Insurance ceiling increases to Rs 50,000 where the insured person is a senior citizen
Qualifying medical expenditure for uninsured senior citizen in own family or parents category	Not generally available for non-senior citizens	Up to Rs 50,000 in the relevant category, subject to conditions
HUF: insurance of members	Rs 25,000	Rs 50,000 where the insured person is a senior citizen
HUF: qualifying medical expenditure of uninsured senior citizen member	Not generally available for non-senior citizens	Up to Rs 50,000, subject to conditions

Important: Under Section 126(4), the combined insurance/check-up and eligible medical expenditure deduction in each individual category (own family and parents) cannot exceed Rs 50,000. Under Section 126(6), the HUF aggregate cannot exceed Rs 50,000. Consequently, the maximum for an individual with qualifying own-family and parent expenses can reach Rs 1,00,000, but only when all statutory conditions are met.

Payment rules and special conditions

Preventive health check-ups - Section 126(3)

Preventive health check-up payments are subject to an overall Rs 5,000 ceiling, included within the applicable category limits, not added on top of them.

Medical expenditure - Section 126(7)

Medical expenditure for a senior citizen qualifies under the specified clauses only if no amount has been paid to effect or maintain health insurance for that person. The expenditure is subject to the applicable Rs 50,000 aggregate ceiling.

Cash payments - Section 126(9)

Cash is permitted for preventive health check-up payments. All other qualifying payments must be made by a mode other than cash.

Multi-year health insurance - Section 126(8)(b)

When a qualifying premium is paid as a lump sum for insurance covering more than one year, the deduction is spread equally over the relevant tax years, subject to the applicable annual limits.

Approved insurance - Section 126(11)

The insurance must satisfy the statutory approval requirements applicable to schemes of the General Insurance Corporation of India or other insurers approved by the relevant insurance regulator.

Relevant statutory definitions

Family - Section 126(10)(b): The spouse and dependent children of the assessee. Parents are dealt with in a separate deduction category.

Appropriate fraction - Section 126(10)(a): One divided by the total number of relevant tax years for which a qualifying lump-sum premium covers insurance.

Relevant tax year - Section 126(10)(c): The year of lump-sum payment and subsequent tax year or years during which the insurance remains in force.

Senior citizen: Apply the meaning prescribed by the Act for the relevant tax year; the higher Section 126 limits depend on satisfying that definition.

Practical examples of deductions

Example 1: Self and parents

An individual pays Rs 22,000 for qualifying insurance covering self and family, and Rs 48,000 for qualifying insurance covering senior citizen parents. Assuming all conditions are satisfied, the deduction is Rs 22,000 + Rs 48,000 = Rs 70,000.

Example 2: Preventive health check-up

An individual pays Rs 23,000 for qualifying family insurance and Rs 4,000 for preventive health check-ups. The own-family deduction is limited to Rs 25,000, not Rs 27,000.

Example 3: Uninsured senior citizen parent

An individual incurs Rs 42,000 of qualifying medical expenditure on a senior citizen parent for whom no health insurance premium was paid. Subject to the other requirements, Rs 42,000 may be deductible in the parents category.

Tax regime caution: Section 126 deductions are generally not available when computing income under the default new tax regime. Check the applicable regime provisions before claiming the deduction.

Frequently asked questions

Can health insurance premiums paid in cash be deducted?

No. Section 126(9) requires non-cash payment for insurance premiums. Cash payment is permitted for preventive health check-ups.

Is the Rs 5,000 preventive check-up deduction additional?

No. It forms part of the applicable deduction ceiling and is subject to an aggregate Rs 5,000 cap.

Can I claim for my parents if they are not dependent on me?

Section 126(2)(b) refers to the assessee's parent or parents without imposing the dependent-child definition applicable to the assessee's family.

Can both premium and medical expenditure be claimed for the same insured senior citizen?

The medical expenditure concession under Section 126(7) requires that no premium be paid to maintain health insurance for that person.

Official legal sources

Read the official Section 126 provision and the Income-tax Act, 2025 as amended. Verify the relevant tax-year provisions and subsequent notifications before filing.

Updated: 10 November 2026. This article provides general legal information and is not a substitute for advice on individual facts.