Section 126 of the Income Tax Act 2025

Section 126 of the Income Tax Act, 2025 applies to individual taxpayers and Hindu Undivided Families (HUFs). This section contains provisions allowing eligible taxpayers to claim tax deductions for payment of health insurance premiums, health check-up expenses, and various other medical costs.

This section replicates the provisions and conditions previously specified Section 80D of the older Income-tax Act, 1961. Apart from naming the eligible taxpayers, expenses eligible for tax deduction and tax deduction limits allowed under Section 126 of the new Income Tax Act.

The provisions under Section 126 highlight key tax deduction benefits of purchasing health insurance plans. These tax deduction benefits are in addition to the financial protection that health insurance provides against rising medical costs. The deduction is subject to prescribed limits, conditions, and approved modes of payment during the tax year.

Section 126 of the Income Tax Act, 2025, allows certain taxpayers to claim deductions on specified medical and health-related expenses. This provision ensures that individuals and families receive financial relief for essential healthcare costs.
Check out the individuals who can claim a deduction under Section 126 of the Income Tax Act, 2025:

Section 126 provides tax relief to individuals for certain medical-related expenses incurred during the tax year. This is unlike some sections of the Income Tax Act, 2025 that provide tax deduction benefits provided in lieu of specific tax saving investments. Check out the eligibility criteria for taxpayers on medical expenses under Section 126, Income Tax Act, 2025:

Various payment methods are permitted in order to claim tax benefits under Section 126 of the Income Tax Act, 2025. These payment modes and applicable conditions for availing the benefit are as follows:

If the individual covered under the policy is aged 60 years or above, the taxpayer becomes eligible to claim the following:

If a health insurance premium is paid as a lump sum covering multiple years, the deduction is apportioned across each applicable policy year.

For example, if a premium of ₹30,000 is paid for a three-year policy, the deduction will be distributed as follows:

Section 126 of the Income Tax Act, 2025 and Section 80D of the Income Tax Act, 1961, have similar objectives. They are different in their presentation and structure. Both provisions allow tax deductions on health insurance premiums and medical expenses.

However, Section 126 is a renumbered and reorganised version of Section 80D, with changes that are largely structural and drafting-oriented rather than indicative of any significant policy changes.

The table below shows the difference between Section 126 of the Income Tax Act, 2025 and Section 80D of the Income Tax Act, 1961:

In order to claim a deduction under Section 126 of the Income Tax, 2025, when submitting your ITR, follow the steps given below:

The following are some of the tips that you can adopt when it comes to tax planning under Section 126: