Tax-Reducing Bills and Receipts in Health Insurance

Posted on: Sep 1, 2023 | | Written by:

Tax-Reducing Bills and Receipts in Health Insurance

Published on September 01, 2023. EST READ TIME: 3 MIN

The rising healthcare costs and the increasing incidence of health conditions have made us realise the importance of health insurance. An adequate and comprehensive medical insurance policy can cover most of your medical bills and prevent financial setbacks. Moreover, under Section 80D of the Income Tax Act, 1961, you can enjoy tax benefits on health insurance premiums of up to INR 1 lakh every financial year. Depending upon the healthcare plans, you can claim tax benefits for individual, family floater, and senior citizen health insurance.

Similarly, other than deductible medical expenses, there are also some non-medical bills and receipts that can help ease your tax liability. Let's look at the tax-reducing bills and receipts you can submit to the income tax department and claim deductions.

Medical Bills and Receipts

1. Health Insurance Premium Receipts

Under Section 80D of the Income Tax Act, 1961, an individual taxpayer can claim deductions of up to INR 1 lakh on health insurance for the following family members:

• Self

• Spouse

• Dependent children aged below 25

• Parents

The following table shows the amount of tax deduction you can claim as per the nature of the health insurance policy:

Parameters	Deduction Amount	Total Deduction
Health insurance for self and family (all below 60 years of age)	INR 25,000	INR 25,000
Health insurance for self, family and parents (all below 60 years of age)	INR 25,000 for self and family + INR 25,000 for parents	INR 50,000
Health insurance for self and family (below 60 years of age) and parents (above 60 years of age)	INR 25,000 for self and family + INR 50,000 for parents	INR 75,000
Health insurance for self, family and parents (all above 60 years of age)	INR 50,000 for self and family + INR 50,000 for parents	INR 1,00,000

2. Preventive health check-ups

These are also counted under deductible medical expenses. Section 80D of the Income Tax Act also allows deduction on preventive health check-ups of up to INR 5000 per financial year. However, this amount will be included in the total tax deduction of INR 25,000 for individual health insurance and INR 50,000 for senior citizens' health insurance.

For example, you are below 50 years of age, and your parents are senior citizens. The premium of your health insurance policy is INR 30,000, and that of your parents' healthcare plan is INR 45,000. Both you and your parents opt for preventive health check-ups during the financial year.

Since you can claim a maximum tax deduction of INR 25,000 on health insurance, you cannot claim a deduction for preventive health check-ups. On the other hand, since your parents can claim a deduction of up to INR 50,000 on their health insurance policy, a deduction of INR 5,000 can be allowed against their preventive health check-up bills.

Important points to keep in mind:

• You must pay policy premiums through your bank account to claim deductions on health insurance premiums. Cash payments will not be counted for deductions.

• You cannot claim tax deductions on health insurance premiums paid for dependent children.

• For preventive health check-ups, the deduction of INR 5,000 will be applicable per policy. So, even if the policy covers 4 family members, the total deduction that can be claimed is INR 5,000.

These are the medical bills tax exemptions you can avail of every year.

Non-medical Bills and Receipts

1. School Fees Receipts

Under Section 80C of the Income Tax Act, parents can claim a deduction of up to INR 1.5 lakh per financial year on their children's school fees. An individual taxpayer can claim deductions for the fees paid toward educating 2 children only. If both parents are taxpayers, they can claim tax deductions on school fees for up to 4 children. Payments should be made through the bank for full-time education in any recognised educational institution in India.

2. Car Fuel Bills

If you use your own vehicle for commuting to work, your employer may offer you a daily or monthly travel allowance. You can submit the original fuel bills while filing taxes and claim income tax benefits under Section 17 of the Income Tax Act.

3. Donation Receipts

Under Section 80G of the Income Tax Act, you can claim tax deductions on donations made to recognised charitable institutions in India. Depending on the organisation you choose for donation, you can avail a deduction of either 50% or 100%, with or without restriction.

Some donations eligible for 100% tax deductions include:

• Prime Minister's National Relief Fund

• National Defence Fund

• National Children's Fund

• Swachh Bharat Kosh

• National Foundation for Communal Harmony

4. Meal Coupons

If your employer gives you meal coupons, such as Sodexo, you can avail of tax deductions of INR 50 per meal. So, if you have 26 working days in a month (including Saturdays), you can save 2600 every month on 2 meals (26 x 100). This way, the yearly tax exemption will add up to INR 31,200.

5. Leave Travel Allowance

Salaried employees can enjoy tax exemptions on the leave travel allowance (LTA) they receive from their employers. If you receive this allowance from your employer, you can use it for booking your flight and train tickets. The ticket expenses of the immediate family members travelling with you will not be taxable.

The following restrictions apply to LTA:

• LTA exemption will be allowed for flight and train tickets only. It will not include accommodation, food, shopping, entertainment, and other expenses.

• You can use this benefit for domestic travel only.

• You can use LTA deductions twice in a four-year block. If you don't avail of the deductions during these blocks, the same can be claimed in the first year of the next block.

6. Mobile/Telephone Bills

If you are employed in a company, you can claim tax reimbursement for the expenses you incur on your mobile and telephone bills. The reimbursement can be up to the total bills paid or the allowance offered by the employer, whichever is lower.

7. Interest on Home Loan

Under Section 80EE of the Income Tax Act, you can claim tax deductions of up to INR 2 lakh on home loan interest paid for your residential property.

However, you must meet the following conditions to claim tax deductions:

• The value of the house for which you have taken the loan should be INR 50 lakh or less.

• The loan you take for the house should be less than or equal to INR 35 lakh.

• The loan should be financed by a housing finance company or a financial institution in India.

Conclusion

To sum up, the above-mentioned bills and receipts can help you avail of tax benefits on health insurance premiums and other non-medical expenses every year. Although you need not submit physical copies of all bills and receipts for tax exemption, it is wise to retain them until you receive a tax refund. The Assessing Officer can ask you to send certain bills and receipts for verification. So, next time you file your taxes, make sure you keep these medical and non-medical bills tax exemptions in mind to reduce your tax liability.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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