The Income Tax Act of India lets you save tax under various sections. By utilizing these sections, a substantial amount of tax could be saved. Investments in instruments eligible under Section 80C, 80CCF, or Section 80D, not only help you invest for the future, but also provide you a deduction from your net taxable income. Did you know your health insurance plan lets you save tax under section 80 D? Your health insurance plan is an ideal and effective tax saving tool, apart from providing cover during medical emergencies. Here is how you could make the most of it.
What Does Section 80D Entail?
A health insurance plan offers financial protection during medical emergencies. Apart from this, it comes with a dual benefit of providing a tax deduction under section 80D. Premiums paid towards health plans covering medical, health and critical illness cost, fall under the purview of this section. Section 80D gives you a tax deduction on the premiums paid with certain limits and conditions applicable on the deduction.
- Limit: The limit of this deduction for individuals is Rs. 15,000 and for senior citizens is Rs. 20,000.
- Eligibility: All individuals and Hindu Undivided Family (HUF) are eligible to claim a deduction under Section 80D.
- The premium amount must be paid from the individual’s income that is chargeable to tax.
- The policy could be an individual plan or a floater plan, in the name of self, spouse, parents and dependent children.
For the Senior Citizen Tax Payers
The Income Tax Act has made special provisions for senior citizens. Section 80 D extends an extra benefit for those above the age of 65 years by entitling a claim amount of up to Rs. 20,000 on premiums paid towards health insurance policies
Health Insurance for Elderly Parents
One of the most ignored part of Section 80D is health insurance for parents. The section extends additional benefits for premiums paid on either parent’s health insurance. What’s more, this benefit is irrespective of whether they are actually dependent on you or not. Please note, this extended benefit does not apply to parents in law.
Benefit when parents are below 65 years of age: A deduction of Rs. 15,000 could be claimed on premiums paid on behalf of parents below 65 years of age. This deduction could be claimed over and above the Rs 15,000 deduction you would be entitled to as an individual.
Benefit when parents are above the age of 65 years: You could claim an additional deduction of Rs. 20,000 on premiums paid towards parents’ health insurance, over and above the Rs. 15,000 individual deduction, in case parents are senior citizens above the age of 65 years. Thus, in such a case the total deduction that could be claimed under Section 80D works out to be Rs. 35,000.
Eligible Instruments under Section 80D
All medical insurance policies are eligible for the 80D deduction up to the specified amount. However certain conditions need to be borne in mind.
- The premium towards the policy should not have been paid in cash.
- Section 80D does not apply to corporate health insurance plans. Corporate plans are taken in the name of the company on behalf of the employees. The premium amount falls under the employees Cost to Company(CTC), and Group health insurance policies are not covered under Section 80D.
- In case, the premiums are being paid partly or fully through the employee’s payroll, then a claim is possible.
An ideal insurance health cover would not only cover your medical expenditure but also help you save a substantial amount of tax. Incorporating a health plan from the beginning of the financial year helps to formulate a suitable tax plan and reduce substantially the burden of income tax.
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