Section 126 · Deductions
Section 126 of the Income-tax Act, 2025 — Health Insurance Premium Deduction (Old 80D)
By CA Rajat Agrawal
Updated 04 Jul 2026
Chapter VIII
📜 What the law says — Section 126, Income-tax Act 2025
126. (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 pay-
ment 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 aggre-
gate 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 in
In plain language
What Section 126 is about
Section 126 of the Income-tax Act, 2025 (effective 1 April 2026, i.e. from FY 2026-27 / AY 2027-28) is the provision that lets you claim a deduction for money spent on health insurance premiums, preventive health check-ups and certain medical expenditure. It is the re-numbered and re-organised successor of the well-known Section 80D of the Income-tax Act, 1961. The tax benefit is substantially the same — the same rupee limits, the same age-based tiers and the same cash-payment restriction — but the drafting is cleaner and split into clearer sub-sections.
Who can claim it
- Individuals — salaried, self-employed, professionals or retired persons who are resident or non-resident.
- Hindu Undivided Families (HUFs) — for insurance and medical expenditure on any member of the HUF.
- Not available to companies, LLPs, partnership firms or any other type of assessee.
The core limits
- Self, spouse and dependent children: up to ₹25,000 a year for health insurance premium (this ₹25,000 bucket also absorbs preventive check-up spend).
- Parents (dependent or not): an additional ₹25,000, forming a separate bucket over and above the family limit.
- Senior-citizen enhancement: where the person insured is 60 years or older, the ₹25,000 in that bucket rises to ₹50,000.
- Preventive health check-up: up to ₹5,000 per year — but this is within (not on top of) the ₹25,000/₹50,000 ceilings.
- Medical expenditure for very senior citizens: if a person aged 60+ has no health insurance, actual medical expenditure incurred is deductible up to ₹50,000.
Adding these buckets gives the widely quoted ceilings: ₹25,000 (family all under 60) + ₹25,000 (parents under 60) = ₹50,000; family under 60 + senior parents = ₹75,000; and everyone 60+ = a maximum of ₹1,00,000.
Key conditions you must satisfy
- Payment mode: premiums and medical expenditure must be paid by any mode other than cash (net-banking, UPI, cheque, debit/credit card). Cash payment disqualifies the deduction. The only exception is preventive health check-ups, which may be paid in cash.
- Only your own money: the premium must be paid out of your income chargeable to tax; you cannot claim for a policy paid by someone else.
- Multi-year single premium: if you pay a lump-sum for a policy covering more than one year, the deduction is spread proportionately — you divide the premium by the number of years the cover runs and claim the "appropriate fraction" each year (Section 126 sub-sections dealing with lump-sum apportionment).
How it interacts with other provisions
- Section 126 sits among the "Chapter VIII / VI-A style" deductions. It is separate from the ₹1.5 lakh omnibus limit (the old 80C, now Section 123), so an 80D-type claim does not eat into your 80C-type limit.
- It works alongside Section 154 (old 80DDB) for treatment of specified diseases and Section 152/153 (old 80DD/80U) for disability — those are distinct deductions.
Old vs new regime — important
Like the old Section 80D, Section 126 is a Chapter-based deduction generally available only if you compute tax under the old tax regime. Taxpayers who opt for the concessional new regime (the default under Section 202) usually cannot claim it. Choose your regime after comparing the tax saving from health-cover deductions against the lower new-regime slab rates.
Practical tips
- Insure your parents — it opens a full second ₹25,000 (or ₹50,000) bucket.
- Keep premium receipts and bank/UPI proof; cash-paid premiums are rejected.
- A health rider on a life-insurance policy also qualifies.
- Get a preventive check-up done to soak up the ₹5,000 sub-limit if your premium alone is below the cap.
💡 Example
Example 1 — Family plus senior parents. Rahul (42) pays ₹22,000 for a floater covering himself, his wife and two kids, and spends ₹4,000 on a full-body check-up for the family. Separately he pays ₹46,000 to insure his father (68) and mother (63). Family bucket: premium ₹22,000 + check-up capped at ₹3,000 (the family bucket is ₹25,000, of which ₹22,000 is already used) = ₹25,000. Parents' bucket (senior citizens, so ₹50,000 ceiling): ₹46,000 fully allowed. Total deduction = ₹25,000 + ₹46,000 = ₹71,000.
Example 2 — Multi-year single premium. Priya (35) buys a 3-year policy in FY 2026-27 for a one-time premium of ₹36,000. The lump-sum is apportioned: ₹36,000 ÷ 3 = ₹12,000 deductible each year for FY 2026-27, 2027-28 and 2028-29, subject to the ₹25,000 cap each year. She cannot claim the whole ₹36,000 in year one.
A short story. Meera, a Jaipur schoolteacher, always paid her health premium in cash "to save the card fee". At filing time her CA disallowed the ₹24,000 claim — cash-paid premiums fail Section 126. The next year she paid the same premium by UPI, added a ₹5,000 check-up for her diabetic mother (68), insured her mother for ₹38,000, and legitimately claimed ₹25,000 + ₹38,000 = ₹63,000, cutting her tax by roughly ₹13,000 in the 20% slab.
| Who is insured | Age of insured | Maximum deduction | Notes |
|---|
| Self, spouse, dependent children | All below 60 | ₹25,000 | Includes up to ₹5,000 preventive check-up |
| Self, spouse, children | Any person 60+ | ₹50,000 | Enhanced senior-citizen limit |
| Parents (dependent or not) | Below 60 | ₹25,000 (extra bucket) | Over and above the family limit |
| Parents | 60 or above | ₹50,000 (extra bucket) | Senior-citizen enhancement |
| Preventive health check-up | Any | ₹5,000 | Within, not on top of, above limits; cash allowed |
| Medical expenditure (no insurance) | 60 or above | ₹50,000 | Only if the senior has no health cover |
| Family all < 60 + parents all < 60 | All below 60 | ₹50,000 | ₹25,000 + ₹25,000 |
| Family < 60 + senior parents | Parents 60+ | ₹75,000 | ₹25,000 + ₹50,000 |
| Everyone 60+ | All 60+ | ₹1,00,000 | ₹50,000 + ₹50,000 |
Related sections
Section 123 — Deductions for LIC, PF, ELSS etc. (old 80C) Section 154 — Medical treatment of specified diseases (old 80DDB) Section 152 — Maintenance of a dependant with disability (old 80DD) Section 153 — Deduction for a person with disability (old 80U) Section 124 — Deduction for interest on education loan (old 80E) Section 202 — New default tax regime and slab rates
Frequently asked questions
Is Section 126 the same as the old Section 80D?
Yes. Section 126 of the Income-tax Act, 2025 replaces Section 80D of the 1961 Act from FY 2026-27. The limits and conditions are essentially identical; only the section number and drafting layout have changed.
What is the maximum deduction I can claim under Section 126?
The overall maximum is ₹1,00,000 — that arises when both you (60+) and your parents (60+) are covered, giving ₹50,000 plus ₹50,000. For a family below 60 with parents below 60 the maximum is ₹50,000.
Can I pay my health insurance premium in cash and still claim the deduction?
No. Premiums and medical expenditure must be paid by a non-cash mode such as UPI, net-banking, cheque or card. Only the ₹5,000 preventive health check-up may be paid in cash.
Does the ₹5,000 preventive check-up come on top of the ₹25,000 limit?
No. The ₹5,000 preventive check-up amount is included within the ₹25,000 (or ₹50,000 for seniors) ceiling, not added over it.
Can I claim Section 126 under the new tax regime?
Generally no. Section 126, like most Chapter deductions, is available under the old regime. If you opt for the concessional new regime (the default), you usually forgo this deduction, so compare both regimes before choosing.
I paid a 3-year premium in one go — can I claim it all this year?
No. A lump-sum multi-year premium must be spread proportionately over the years the policy is in force. Divide the premium by the number of years and claim that fraction each year, subject to the annual cap.
Can an HUF claim under Section 126?
Yes. An HUF can claim up to ₹25,000 for insurance on any member's health, and up to ₹50,000 for medical expenditure on a senior-citizen member without insurance, subject to the aggregate limits.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 04 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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