This was Section 80D under the Income-tax Act 1961. See the mapping
Chapter VIII: Deductions
Section 126, Income-tax Act 2025: Deduction in respect of health insurance premia
Plain-English summary
The health insurance deduction, Section 80D of the 1961 Act renumbered with its limits intact. On the old regime you can deduct up to ₹25,000 a year for premiums covering yourself, your spouse and dependent children, and a further ₹25,000 for your parents' cover; either bucket rises to ₹50,000 when the person insured is 60 or older. Preventive health check-ups get a ₹5,000 sliver inside those caps, and uninsured senior citizens can claim ₹50,000 of actual medical spending instead. Pay by any mode except cash. The default new regime does not offer this deduction.
What changed when Section 80D became Section 126?
Only the address. Every limit, the ₹5,000 preventive check-up allowance, the senior-citizen uplift, the medical-expenditure route for the uninsured and the no-cash rule carry over from Section 80D of the 1961 Act unchanged. The 2025 Act redrafts the section into a cleaner run of sub-sections, and from TY 2026-27 your return will cite Section 126 where it used to cite 80D.
The practical upshot: nothing you were doing needs to change. A policy bought under the old law keeps its deduction under the new one, and the planning questions (floater versus separate parental cover, insurance versus the expenditure route for seniors) stay exactly as they were.
Section number confirmed by ClearTax, Axis Max Life and EZTax analyses; pending CA verification against the Gazette text.†
Who can claim, and whose cover counts?
Individuals and HUFs, on the old regime only. The people whose cover qualifies are tightly listed:
- An individual can claim premiums covering self, spouse and dependent children in one bucket, and parents in a second bucket. Parents qualify whether or not they depend on you.
- An HUF can claim premiums on any member's health cover: ₹25,000, or ₹50,000 where the insured member is a senior citizen.
- Nobody else counts. Premiums for siblings, parents-in-law, grandparents or earning adult children earn no deduction however real the expense.
- Companies, firms and LLPs are outside the section entirely, and so is anyone filing on the default new regime.
What are the deduction limits?
The buckets are independent, which is where most of the value hides. A 35-year-old paying a ₹22,000 family-floater premium and a ₹45,000 premium on senior parents' cover claims ₹67,000 in one year: the first bucket capped at ₹25,000, the second at ₹50,000.
| Who the payment covers | All insured under 60 | Any insured 60 or older |
|---|---|---|
| Self, spouse, dependent children | ₹25,000 | ₹50,000 |
| Parents, dependent or not | ₹25,000 | ₹50,000 |
| Preventive check-ups (inside the caps above) | ₹5,000 | ₹5,000 |
| Best case, both buckets together | ₹50,000 | ₹1,00,000 |
How does the preventive check-up allowance work?
₹5,000 a year, inside the caps, not on top of them. Full-body screenings, diagnostic packages and annual health checks for yourself, your family or your parents all count, and this is the one payment the section lets you make in cash.
Because it lives inside the bucket, the allowance only helps when premiums have not already filled the cap. Pay a ₹25,000 family premium and the family bucket is full; pay ₹20,000 and a ₹5,000 round of check-ups tops the claim up to the ceiling for free.
Which payments earn no deduction?
The exclusions catch real money every filing season:
- Cash premiums. Pay an insurance premium in notes and the deduction is gone; only preventive check-ups may be cash.
- Premiums for people outside the list: siblings, in-laws, grandparents, adult children with their own income.
- Group cover your employer pays for. You did not pay the premium, so there is nothing to claim; a top-up you pay yourself to extend that group policy does count.
- A multi-year single premium claimed in one go. Pay once for a 2-year or 3-year policy and the deduction spreads in equal fractions over those years, each year within its own cap.
Can uninsured senior citizens claim medical bills instead?
Yes. Where a person aged 60 or above has no health insurance in force, actual medical expenditure on them (hospital bills, medicines, consultations, diagnostics) is deductible up to ₹50,000 a year. The route covers yourself, your spouse or your parents, and it fills the same ₹50,000 senior bucket, not an extra one.
Payment discipline matters doubly here: the bills must be paid by bank transfer, card or UPI. Cash at the hospital counter, common in an emergency, kills the claim, so route even small pharmacy bills through the bank when a parent is uninsured.
Is the deduction available under the new regime?
No. Section 126 belongs to the old regime; the default new regime under Section 202 offers no equivalent. For a family paying meaningful premiums this is one of the deductions that decides the regime question, stacked with the investment basket (Section 123) and home-loan interest (Section 22).
The health cover itself is regime-neutral: claims are paid, cashless networks work and premiums buy the same protection whichever way you file. Only the deduction disappears on the new regime.
Should tax decide how much health cover you buy?
Buy the cover for the risk and take the deduction as a discount, in that order:
- Size cover to hospital costs in your city, not to the ₹25,000 cap. A single cardiac admission in a metro can pass ₹5 lakh; the tax saved on a premium is a fraction of that.
- Insure parents before they turn 60 if you can: premiums load sharply at 60-plus, and a policy in force also keeps the cleaner insurance route open instead of the bill-by-bill expenditure route.
- Use the check-up allowance every year: it is effectively a free ₹5,000 of deduction for screenings your family should be doing anyway, and cash is allowed for it.
- Route every premium and medical bill through the bank. The no-cash rule has no exceptions beyond check-ups, and reconstructing digital trails at filing time is easier than arguing about receipts.
Worked examples
Family floater plus senior parents' policy
Ravi, 35, pays ₹22,000 for a floater covering himself, his wife and their daughter, plus ₹4,000 for family health check-ups: the family bucket allows ₹25,000 of the ₹26,000 spent. His parents are 62 and 64, and their policy costs ₹43,000: fully allowed within the ₹50,000 senior cap. Total deduction ₹68,000; at the 30% slab that saves ₹21,216 including cess.
Uninsured parents' hospital bills
Meera, 45, pays ₹21,000 for her own family's cover. Her 68-year-old father has no policy, and the year's hospital and pharmacy bills for him come to ₹64,000, all paid by card and bank transfer. The medical-expenditure route allows ₹50,000 of it. Her total deduction is ₹71,000, saving ₹14,768 at the 20% slab including cess.
Two-year single premium paid upfront
Amit pays a one-shot ₹44,000 premium for a 2-year policy covering himself and his wife, both under 60. He cannot claim ₹44,000 now: the deduction spreads as ₹22,000 in each of the two tax years, and each year's slice fits within his ₹25,000 cap. Had the premium been ₹56,000, each year's ₹28,000 slice would still stop at ₹25,000.
Read the section as enacted
The statutory text is loaded verbatim from the Gazette copy of the Income-tax Act 2025, never from secondary sources or memory. This section's text is in the verification queue; the CA-checked copy appears here the moment it clears.
Section 126 FAQs
Can I claim the premium I pay for my in-laws?
No. The parents' bucket covers your own parents only. The clean fix is for your spouse to pay their parents' premium from their own account and claim it in their return, since each spouse has an independent Section 126 limit.
My children are earning adults. Does their premium still count?
No. Children must be dependent on you for their cover to sit in your family bucket. An earning child should hold and pay their own policy and claim the deduction themselves, and they can cover you in their parents' bucket.
Can my spouse and I split one family floater premium?
Yes, in the proportion each of you actually pays, and the split needs a matching money trail from separate accounts. The same rupees can never be claimed twice, but a large floater premium split across two payers can use both caps.
My uninsured mother is 58. Can I claim her hospital bills?
No. The medical-expenditure route opens only at 60. Below that age the section rewards insurance alone, which is itself the argument for buying parents' cover before the age-60 premium jump.
I paid a three-year premium upfront. What do I claim each year?
One-third of the premium in each of the three tax years the policy covers, and each year's slice is tested against that year's cap. The insurer's certificate states the yearly eligible amount.
Are top-up, super top-up and critical-illness plans eligible?
Yes. Premiums on health policies from any IRDAI-registered general or health insurer qualify, including top-ups over a base or group policy and defined-benefit critical-illness covers, within the same bucket limits.
What proof do I need to keep?
Nothing is filed with the return, but keep the premium receipts or the insurer's 80D/126 tax certificate, bank statements showing non-cash payment, and for the expenditure route the medical bills with their payment trail. Salaried claimants should give these to their employer with Form 12BB so TDS reflects the deduction.