Tax Saving with Health Insurance

Tax benefits of health Insurance

 

Health insurance is a basic necessity today as it not only safeguards your health but also provides financial security, access to quality healthcare, and reduces your income tax liability. Section 80D of the Income Tax Act offers tax benefits for individuals and families investing in health insurance. Let’s explore the benefits, eligibility, exclusions, and process to claim tax savings under Section 80D.

 

What is Section 80D?

  • Section 80D of the Income Tax Act permits taxpayers to claim tax deductions for premiums paid towards health insurance policies.

  • This deduction is applicable to policies purchased for self, spouse, dependent children, and parents.

  • An additional benefit under this section includes deductions for preventive health check-up expenses.

  • Furthermore, Section 80DD provides extra rebates for medical expenses incurred for dependents with specified disabilities.

  • Furthermore, Section 80DDB provides rebates for medical expenses incurred for treatments for specified illness.

 

Tax Rebate Under Section 80d

  • Self and Family (Spouse, Children):
    • Rebate up to ₹25,000 for individuals below 60 years.

    • Rebate up to ₹50,000 for senior citizens (aged 60 years and above).

  • Parents:
    • Rebate up to ₹25,000 for insuring parents below 60 years.

    • Rebate up to ₹50,000 for senior citizen parents.

  • Preventive Health Check-ups: Up to ₹5,000 within the overall limit for self, family, and parents.
  • HUF Members: Hindu Undivided Families can also claim deductions under this act if premiums are paid for any family member.
  • Maximum Deduction Possible: ₹1,00,000 (for self, family, and senior citizen parents).

Policy for?

Maximum Deduction*

Self & Family
(below 60 years)

₹ 25,000

Self & Family + Parents
(all of them below 60 years)

₹ 50,000

Self & Family
(below 60 years)

+ Parents
(above 60 years)

₹ 75,000

Self & Family + Parents
(All above 60 years)

₹ 1,00,000

 

Who Can Apply for Tax Deduction Under 80D Section?

  • An individual or HUF (Hindu Undivided Family) can claim a deduction under Section 80D. 

  • Contributions made to the Central Government Health Scheme (CGHS) or any other notified scheme are eligible for a tax deduction. 

  • Preventive health check-ups paid in cash are also considered for deductions under this section. 

  • Health insurance premiums should be paid through non-cash modes. 

  • The taxpayer must be the policyholder or pay the premium on behalf of their dependent family members or parents.

 

How to Claim Section 80D Benefits

1. Required Documents to Claim Deduction
  • Health Insurance Premium Receipts

  • Policy Document

  • Medical Bills

  • Diagnostic Test Reports

  • Medical History

  • Scheme Documents

  • Doctor's Prescription

  • Payment Proof

  • Bank Statements

 

2. Things to Verify
  • Ensure the insurer is approved by the Insurance Regulatory and Development Authority of India (IRDAI).

  • Premium payments must be made through non-cash modes such as online banking, debit/credit cards, or cheques.

 

3. ITR Filing
  • Mention deductions under Section 80D while filing your Income Tax Return (ITR).

  • Attach supporting documents if required during verification.

 

Exclusions Under Section 80D

  • Health Insurance Premiums if paid in cash are not eligible for deduction. 

  • Premiums paid by employers for group health insurance are not deductible by the employee under this section. 

  • Premiums for policies not issued by an IRDAI-approved insurer are excluded.

 

Conclusion:

We explored how investing in health insurance is a wise decision, offering a comprehensive package of health and wealth benefits. It supports emergency financial needs, provides access to quality healthcare, and offers tax benefits under Section 80D. Understanding the eligibility criteria, limits, and exclusions can help you maximize savings while staying compliant with tax laws.

 

Disclaimer:

The above information is for general awareness and should not be considered legal advice. Please seek the assistance of a health insurance advisor and consult a tax advisor or financial expert for personalized guidance.

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