Apart from getting protection and financial security a major advantage of health insurance is tax benefit. Section 80D of the Income Tax Act, 1961 in India allows everyone to avail tax benefits on the premium paid, whether the individual is self-employed or salaried. These tax benefits are not only available for self but also on health insurance for spouse, children, and parents.
The different tax benefits that come along with the health insurance coverage usually include;
As per Section 80D of the Income Tax Act, for a health insurance policy, the premium paid is deductible from the taxable income. The upper limit for the deductible amount is rupees 25,000 and can be extended to up to rupees 50,000 for senior citizens. This implies that the insured is now eligible to enjoy a deduction of up to rupees 75,000 from the taxable income. In cases, where the age of both the insured and parents is more than 60 years, the deductible amount can be extended up to rupees 1,00,000.
You can save tax on preventive health check-ups on an annual basis. You can claim a maximum amount of rupees 5,000 under this feature.
For every financial year, one is eligible to avail tax exemption of up to rupees 25,000 on the premium that you pay. For parents that fall under the senior citizen age, the maximum limit even rises to rupees 50,000 annually. The limit additionally comprises rupees 5,000 towards yearly health check-ups forthe parents.
Up to rupees 25,000 for premium paid for self, family, or children and up to rupees 25,000 for premium paid for parents who are senior citizens can be claimed under this feature.
Up to rupees 25,000 claim amount for premium paid on health insurance for self, family, or children is allowed. Parents that are senior citizens are considered for tax benefits up to rupees 25,000.
Claim deduction of up to rupees 50,000 is allowed on medical insurance premium during every year. Rupees 1 lakh for medical treatment is covered for a particular critical illness.
On Multi-year health insurance, you can avail dual benefits of getting discounts on premiums as well as tax benefits on a pro-rata basis in a proportionate way over the years for which the policy has been purchased. For instance, for a premium paid of rupees 30,000 on a three-year health insurance policy, one can avail a tax benefit of rupees 10,000.
While aiming for tax benefits on health insurance policy, always look for plans that has a strong network of hospitals, smooth claim settlements process, good coverage benefits and robust customer care system.
Tax benefits can be availed on any and every health insurance plan chosen for self, children and parents.To avail tax benefits, the policy holder needs to submit premium payment receipt and a copy of your insurance policy, including the names of family members, ages, and relationship to the policyholder along with an 80D certificate from the insurance company. Remember to carefully read the terms and conditions of tax exemption under any health insurance policy and avoid paying premiums in cash to avail of tax deductions.
Let's take a look at some frequent queries on Tax benefits while buying a health insurance;
Ans. No, you are not allowed to pay premium in cash to avail tax benefit on health insurance. Make sure to choose any other mode of payment like internet banking, cheque, credit and debit card, or bank demand draft.
Ans. No, according to Section 80D of the Income Tax Act in India, you are allowed to avail tax benefits only on the premium paid on health insurance for self, spouse, children, and parents. For brother, sister, grandfather, grandmother and other relatives, thetax cannot be claimed as a deduction for availing benefits.
Ans. Yes, the expenses incurred on the treatment of some specific diseases are tax-deductible. These diseases include cancer, Parkinson's disease, AIDS, neurological disorders, chronic renal failure, haemophilia and thalassemia.