Leave your tax burdens aside with Health Insurance

Posted on: Feb 4, 2021 | | Written by:

Leave your tax burdens aside with Health Insurance

Published on January 21, 2010 | Est Read Time: 3 min

The premium on your Medical Insurance policy is considered for tax deductions under Section 80D of the Income Tax Act, 1961. Hence, if you buy Health Insurance, you stand to enjoy a host of tax benefits along with insuring your medical spends. The premium amount paid towards the Health Insurance of you and your family including your parents can be claimed as a tax deduction under section 80 D from your taxable income. However, the maximum deduction amount you can claim is based on your age.

What is Income tax section 80D?
Section 80D of the Income Tax Act provides income tax deductions related to the medical insurance premium paid for you and your family members. You can claim a tax deduction for the health insurance premium paid for yourself, your parents, children, and spouse.

Deductions as per Section 80D:
Section 80D deductions are only connected with medical insurance policies. These deductions are as follows:

· Individual and family
If you pay insurance premiums for yourself, your spouse, and your kids then you can claim a maximum tax deduction of Rs 25,000 per annum. In the case of senior citizens, the limit is Rs 50,000 a year.

· Parents
If you pay health insurance premiums for your parents, you can claim a maximum tax benefit of Rs 25,000 per year if your parents are less than the age of 60. However, if your parents are senior citizens, you can claim a tax benefit up to Rs 50,000 per year.

Additional section 80D deduction
You are eligible to claim an additional 80D income tax deduction of Rs 5,000 for the expenses related to health check-ups. This includes complete expenses for a health check-up of the entire family.

Section 80D Limits:
You can claim a tax deduction on the premium paid for yourself, your family (spouse and kids), and your parents. Below is the section 80D limit applicable to different categories of people across various age groups:
· For individual and family - Rs 25,000 tax deduction + Rs 5,000 health check-up, which sums up to Rs 30,000
· For individual, family, and parents- Rs 50,000 tax deduction + Rs 5,000 health check-up exemption, which sums up to Rs 55,000
· For individual, family, and senior citizen parents - Rs 75,000 tax deduction + Rs 5,000 health check-up exemption, which takes the total tax deduction to Rs 80,000

For a better understanding of section 80 D here is an example:
You are 61 years old and are paying a premium for yourself and your dependents ie your spouse and 2 children of Rs 32,000. You are also paying for your parent’s health insurance policy who are 85 years old then under Income Tax section 80D you can avail the following benefits:
1. Tax benefit of Rs 30,000 on the health insurance premium of Rs 32,000 that you paid for your dependants and you.
2. Additional tax benefit of Rs 30,000 for senior citizen parents apart from the payment of Rs 35,000 made.

Therefore a total expense of Rs 60,000 can be claimed and not the total expense incurred. If the medical insurance premium is paid in cash then there is no tax benefit. The payment must be paid in a form of online bank transfers, cheques, or via debit or credit cards.

Conclusion:
We are entitled to numerous tax benefits by the government so why bring up thoughts of not paying taxes or thinking that paying tax is a waste of money. Take advantage of the tax benefits under section 80D and save in the present as you plan for the future! Invest wisely and save taxes.

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