Majority of us purchase a health insurance policy for securing or protecting ourselves and our families in the event of medical emergencies. However, most people are not aware of the fact that a health insurance policy can also help you save tax. Yes, it does! In this article, we have detailed important information regarding the tax benefits of a health insurance policy.
So, let’s understand the various health insurance tax benefits under section 80D of the Income Tax Act, 1961.
Section 80D or more usually referred to as deduction under section 80D of the Income Tax Act, 1961 entails tax deductions on your health insurance premiums. Under this section, you can claim a deduction of up to Rs. 55,000 per year for all your paid-up health insurance premium instalments. The premium you pay should either be for yourself, your spouse, dependent children or parents.
How does it work?
There are different categories defined in terms of “Persons Covered” when referring to Section 80D of the Income Tax Act, 1961. Following are the categories available:
- Self and Family – This means that you can avail tax deduction on the premium paid to cover yourself as well as your spouse and dependent children
- Self and Family + Parents – This implies that on top of availing tax benefits for yourself, spouse and dependent children, you can avail tax benefits for the health insurance premium paid by you for your parents as well
- Self and Family + Parents (Senior Citizens) – This is essentially the same as the “Self and family + Parents” category with the difference that the deductible amount increases for senior citizen parents
- Self (Senior Citizen) and Family + Parents – In this category, the deductible benefits increase to INR 1,00,000 in case you and your parents are both senior citizens
The following table illustrates the various deduction limits/tax benefits that you can avail on your health insurance policy premium:
|Self and Family||INR 25,000/-|
|Self and Family + Parents||INR 50,000/-|
|Self and Family + Parents (Senior Citizens)||INR 75,000/-|
|Self (Senior Citizen) and Family + Parents (Senior Citizens)||INR 1,00,000/-|
An important thing to note is that before you avail a tax benefit, the premium payment that you make needs to be done either through a credit card or cheque for you to be able to claim a tax deduction.
Also, the health insurance premium that you pay should be from your taxable income for that financial year. So, opting for a higher sum insured not only helps provide a better cover but also helps save a significant amount of tax for you. Also, senior citizens would enjoy a higher savings on tax as compared to individuals who are below the age of 65 years.
Health insurance online is a great and easy way to get health insurance plans for yourself and your family. So, go ahead and buy your health insurance online and cover yourself and your family in case of any unforeseen situations!
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