‘Nothing is wealthier than health’ and therefore, taking care of your health and that of your family is important. As the cost of diseases and medical treatment increases, getting a health insurance/medical policy is essential. It not only ensures that you don’t go bankrupt after an illness, but also provides ample coverage. Importantly, if you don’t need it, you get a health insurance tax benefit.
Investing in a medical insurance policy not only saves you money but also gives you income tax benefits.
Below are the need to know health insurance tax benefits. This will help you to deduct tax under appropriate sections.
Deduction under Section 80D of Income Tax Act
The Government of India provides deduction on premium paid to individual taxpayers under Section 80D of the Income Tax Act. You can get tax benefits on the normal premium paid to cover critical illness.
Self and immediate family (for spouse and dependent children):
In the case of health insurance tax benefits you need to remember the following. In this case, you can claim up to INR 25,000 in a financial year, which will be for you, your wife and dependent children. If you or your wife is a senior citizen, i.e. 60 years or above, the deduction limit will increase to INR 50,000. Deduction is also allowed for up to INR 5,000 in the financial year examined.
For parents:
Medical insurance premiums paid for medical ailments of parents or legal guardians are allowed a deduction of up to INR 25,000 for a financial year. If either of your parents is a senior citizen, the maximum limit is INR 50,000 for a financial year.
The maximum amount admissible shall always be the actual premium, or the lower of the limit permitted under this section. This should include the medical check-up amount.
Deduction under Section 80DD of the Income Tax Act
If you have an independent dependent, you can claim medical insurance tax benefits up to INR 75,000. It is based on expenses for nursery, medical treatments, resuscitation, etc. In case of miscarriage, you can claim up to INR 1.25 lakh. Trustees are your wife, children, parents or sisters. But, to claim the deduction, you will need to provide supporting medical certificates.
Deduction under Section 80DDB of the Income Tax Act
If you are undergoing treatment for a specific disease, you can claim INR 40,000 for all these medical expenses. If you are claiming for a senior citizen, the benefit limit is INR 1 lakh. This includes the treatment of diseases mentioned in Rule 11DD of the Income Tax Act. This deduction can be claimed for self, spouse, parents/guardians, children and siblings. F.Y. Till 2017-2018 you could claim INR 60,000 and INR 80,000 for senior citizen (60-80 years) and super senior citizen (above 80 years).
No tax benefit on cash payment or group health insurance
Medical illness premiums should be paid through online banking, draft, check or debit or credit card to avail health insurance tax benefits. No tax deduction is allowed for installment payments. But, preventive health check-ups can be paid for and claimed as a deduction. Also, tax benefits do not increase group health insurance premiums, paid by your employer.
Now that you know about health insurance tax benefits in India, it’s time to ask about high medical bills. Don’t be shy and start with tax savings on medical insurance.
Disclaimer:
Read the sales brochure carefully before selling for more information on risk factors, terms and conditions.
