Health insurance not only provides financial security against medical expenses but also offers tax benefits under Section 80D of the Income Tax Act. By understanding and leveraging tax benefits of health insurance, you can save your taxes while ensuring comprehensive health coverage for yourself and your family.
Here’s everything you will learn about how to maximize tax benefits of health insurance.
Understanding Section 80D Benefits
Under Section 80D, you can claim deductions for the premiums paid towards health insurance policies. The tax benefits of health insurance are as follows:
- Self, Spouse, and Dependent Children: Up to Rs. 25,000 per year
- Parents (Senior Citizens – Age 60 or above): Additional Rs. 25,000 per year (Rs. 50,000 in total)
- Parents (Below Age 60): Up to Rs. 25,000 per year (if covered under your policy)
Who can get tax benefit of health insurance?
The tax benefits of health insurance under Section 80D is available to all individuals, regardless of their income bracket. Whether you are a salaried professional, a self-employed individual, or a senior citizen, you can benefit from this tax-saving opportunity.
Additional Benefits:
- In Addition to Section 80C: The benefits under Section 80D are in addition to the deductions available under Section 80C for investments like PPF and ELSS.
- Coverage for Senior Citizens: Senior citizens aged 60 years and above can claim a higher deduction of up to Rs. 50,000 per financial year.
Real-Life Examples:
- Rohit’s Scenario: Rohit, aged 30, pays a premium of Rs. 20,000 for his health insurance policy and Rs. 10,000 for his spouse’s policy. Additionally, he pays Rs. 35,000 for his father’s medical insurance. Despite paying Rs. 65,000 in premiums, Rohit can only avail a deduction of Rs. 50,000, as per the permissible limit.
- Vivek’s Scenario: Vivek, aged 50, pays a premium of Rs. 22,000 for his health insurance policy and Rs. 45,000 for his 70-year-old mother’s policy. He can claim the entire amount of Rs. 67,000 as a deduction under Section 80D, within the allowed limit of Rs. 75,000.
Additional Deductions:
- Preventive Health Check-ups: Section 80D also allows an additional deduction of Rs. 5,000 for expenses incurred on preventive health check-ups.
- Total Deductions: Taxpayers can claim up to Rs. 1 lakh in deductions under Section 80D for premiums paid towards health insurance for themselves and their parents.
Conclusion:
In conclusion, health insurance not only provides financial security but also offers significant tax benefits. By investing in a comprehensive health insurance policy, you can not only secure your health but also reduce your tax liability. Remember to make premium payments through non-cash modes to get the tax benefits of health insurance.
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