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If you are looking for ways to save taxes while also protecting your family, health insurance is a popular avenue. As healthcare prices fluctuate with the changing economy, there is an increasing need to buy a health insurance plan.Additionally, it is one of the best tax-saving instruments available on the market today, as you can avail of tax deductions for health insurance under 80D.But before you buy health insurance, understand the nuances of Section 80D of the Income Tax Act of 1961 and avail maximum tax benefit from your health insurance plan.
The Government of India introduced the health insurance tax benefit 80d under the Income Tax Act to encourage Indians to buy health insurance plans and secure their and their families’ future. Under Section 80 (D) of the Income Tax Act 1961, the premium paid by individuals or HUF in a financial year towards the health insurance plan is tax deductible.These tax deductions are highly significant when making a personal financial plan and tax planning. According to this section, you can claim up to ₹25,000 on health insurance premiums in a financial year and up to ₹50,000 for premiums of senior citizens’ health insurance.
Under Section 80D, deductions for the following payments are eligible for health insurance tax benefit under 80D:
The 80D tax benefits are different for money spent on premiums for self, spouse, children and parents. Here is a table explaining the maximum deductions you can avail in different scenarios:
To claim maximum 80D tax benefits, you can use a health insurance premium calculator to determine the amount you need to pay and understand its corresponding tax benefits.
Preventive health check-ups are conducted as a part of regular health check-ups to identify the onset of any critical illness well in advance to minimise its risk. To encourage people to conduct these check-ups regularly, the government of India has offered tax deductions of up to ₹5,000 for expenses incurred during the check-ups.Individuals can claim these benefits for payment made towards preventive health check-ups for themselves, their spouse, their parents or their children. However, the deductions for preventive health check-ups are clubbed with the overall maximum 80D tax benefits for health insurance plans of ₹25,000 for individuals below 60 and ₹50,000 for senior citizens.
Any entity or organisation other than those mentioned above, such as a firm or a company, cannot claim health insurance tax benefits under 80D.
The most important benefit is the health insurance tax benefit under Section 80D of the Income Tax Act of 1961. This allows any eligible individual to claim tax deductions over their or their family members’ health insurance premiums. The maximum limit for individuals for this is ₹25,000, and for senior citizens, it is ₹50,000.
You are eligible to claim extra tax benefits for your parents if they are older than 60 years of age. You can claim them irrespective of their age.
To promote timely health check-ups for various illnesses and better health, the government of India has also included a cover for expenses incurred due to preventive check-ups. The maximum limit to this is ₹5,000.
If you pay premiums to include critical illnesses in your health insurance policy, you can claim premium deductions for this inclusion (subject to the aforementioned restrictions).
If you are paying premiums for pre-existing disease cover, you can also claim tax deductions under Section 80D of the Income Tax Act.
Some insurance companies offer impressive discounts when you purchase multi-year policies. In this scenario, you are required to pay your premium as a lump-sum amount for a longer tenure (2, 3 or 5 years).Other than long-term discounts, investing in multi-year policies will also help you avail of proportionate income tax deductions under Section 80D.Similar to annual health insurance policies, multi-year health insurance policies are also subject to a maximum limit of ₹25,000 for policyholders and their families and up to ₹50,000 for dependent senior citizens.
According to Section 80D, medical expenses incurred for the treatment of a dependent senior citizen are eligible for tax deductions if the senior citizen is not already covered under health insurance. If they have a medical insurance plan, you can not claim tax benefits.For example; Suppose Meera has paid ₹60,000 towards the treatment of her 70-year-old parents, who do not have a health insurance plan. In this case, Meera can claim a deduction of ₹50,000 under Section 80D. In this way, she reduces her tax liability from ₹60,000 to just ₹10,000.
According to Section 80DDB of the Income Tax Act, you can claim tax deductions up to ₹40,000 on medical expenses incurred on treatment of a specified illness, such as critical cancer, AIDS, dementia, chronic renal failure, etc.You can claim these benefits for yourself, your spouse, dependent children and parents. For senior citizens, the maximum tax deduction claim limit under Section 80DDB is increased to ₹1,00,000 per year.However, you need to submit all the relevant documents, including your policy papers, medical diagnosis, hospital discharge bills and so on.
Under Section 80DD of the Indian Income Tax Act, you can claim deductions up to ₹75,000 per year on healthcare expenses incurred due to the treatment of a dependent family member with a disability.In the event of severe disability (80% or more), tax deductions up to ₹1,25,000 are allowed per year.Note that dependents for this benefit can be yourself, your spouse, children, siblings or parents.
To be eligible for tax deductions under Section 80D, you must meet the criteria mentioned under the Income Tax Act. You can not claim 80D tax benefits in the following scenarios:
To become eligible for tax deductions under Section 80D, you need to purchase a health insurance plan. From individual health insurance to family floater insurance and others, there are multiple types of plans you can choose from.
After purchasing your health insurance, carefully save your policy papers and premium payment receipts. These will be used as proof of coverage.
At the time of filing your tax returns, claim the deductions applicable to your health insurance premiums.
Finally, submit your income tax return along with the relevant documents and ITR form. You can do so online or offline by visiting the income tax office.
To claim mediclaim tax benefits under Section 80D, follow these payment guidelines:
Many taxpayers get confused between tax deductions under Section 80C and 80D. If you are among those, here is a detailed comparison between Section 80C and Section 80D of the Indian Income Tax Act:
If you want to maximise your tax savings, then consider purchasing your health insurance plans early. At the beginning of a fiscal year, start by assessing your coverage needs and investing in the right plan accordingly. An early purchase will help you enjoy comprehensive health coverage throughout the year and claim the maximum deductions you are eligible for.
If you already have a health insurance plan, make sure to renew it on time for continuous coverage. It is important to understand that your policy will lapse if not renewed within the given timeframe. A lapsed policy does not offer financial coverage or tax benefits.
If you are a family owner, consider investing in family floater health insurance instead of an individual insurance policy for yourself. However, if you have parents who are senior citizens, consider buying separate senior citizen health insurance for them. Insurance premiums for senior citizen health policies are higher and can increase the deductible tax amount under section 80D.
It is very important to understand the available tax deduction limits under section 80D. As discussed, you can claim up to ₹25,000 for health insurance premiums for yourself and your family and an additional ₹50,000 for health insurance paid for senior citizens.
If your existing insurance plans fail to meet this limit, consider purchasing useful riders and add-ons like critical illness insurance, maternity and childbirth cover, etc.
Your health insurance provider may ask you to pay lump-sum premiums for multiple years at once. If you are expecting an increased income tax rate, then investing in a multi-year policy will help you lower your tax liability by locking your investment with a low tax rate.
Your health insurance needs can change over time based on your family size, health situations, and tax regulations. Hence, make sure to review and adjust your coverage every year.
Understanding the provisions and benefits of Section 80D of the Income Tax is crucial for availing maximum tax benefits. By claiming these deductions, you can significantly reduce your taxable income and secure financial protection for you and your family at the same time.Furthermore, you are also eligible for tax deductions for adding inclusions like critical health insurance. This means you can add the necessary coverage to secure your family’s financial future.Beyond tax benefits, ensure overall protection by choosing a health insurance plan with adequate coverage. Reliance General Insurance offers features like AYUSH benefits, cashless treatment, cover for pre- and post-hospitalisation expenses, and 24X7 emergency assistance.With Reliance General Insurance’s health insurance plans, which provide all-round protection and a health insurance tax benefit under 80D, you can better prepare for unforeseen medical emergencies.
Yes, the benefits under Section 80D are in addition to the benefits under Section 80C of the IT Act. So, you can claim both of them at the same time.
Yes, you can claim deductions for all your health insurance premiums. However, your yearly deduction limit will remain the same, which is ₹25,000 for individuals and ₹50,000 for senior citizens.
For salaried employees, you claim your benefits by submitting the necessary documents, such as policy documents and medical bills, to your employer. Additionally, you can claim these benefits while filing an ITR.
Yes. As per the latest provision of Union Budget 2018, if you have made a lump sum payment for a medical insurance policy that is valid for multiple years, you can claim tax deductions equivalent to a specified fraction of the total amount.
Yes. You can claim tax deductions on more than one health insurance plan. However, you must meet the eligibility criteria in order to receive tax benefits.
No. You can not claim tax benefits on your group health insurance plans.
Yes. You can claim the medical bills of senior citizens if they are not already covered under health insurance.
Yes. Under the Income Tax Act, you can claim tax benefits under both section 80D and 80DD.
No. You can not claim tax deductions under Section 80D if your premiums are paid in cash.
Yes. You can claim Section 80D tax deductions on premiums paid towards a global health insurance policy. However, you are eligible for such tax benefits only if your insurance provider is registered with the Insurance Regulatory and Development Authority (IRDAI) of India.
Disclaimer:T&C Apply. Tax benefits are subject to conditions under Section 80D of the Act and amendments thereof. The tax laws are subject to amendments/changes from time to time. Please consult your tax advisor for details.
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