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What are the Tax Benefits of Health Insurance
Tax benefits on a health insurance policy:
Health insurance provides you and your loved ones financial security in case of a medical emergency. Whether it be an emergency or a planned hospitalisation, a health insurance policy ensures complete coverage by helping you pay for medical expenses mentioned in the policy.
Apart from safeguarding your finances from rising medical expenses, you can also avail tax benefits on the premiums paid towards your health insurance as laid down by Section 80D of the Income Tax Act, 1961 (“Section 80D”). This makes a health insurance plan a smart investment.
Here’s how much deduction you can avail under Section 80D.
Take a look at the tax benefit you can get by investing in health insurance:
Scenario | Medical insurance premium paid for | Total deduction^ under Section 80D | |
---|---|---|---|
|
Self, spouse and dependent children |
Parents (whether dependent or not) |
|
If you and your parents are below 60 years of age. |
₹25,000 |
₹25,000 |
₹50,000 |
If you and your family are below 60 years of age and your parents are above 60 years of age |
₹25,000 |
₹50,000 |
₹75,000 |
If both, you and your parents, are above 60 years of age. |
₹50,000 |
₹50,000 |
₹1,00,000 |
Note: You cannot claim premiums paid for your in-laws, brothers, or sisters.
Things to keep in mind when claiming exemption under Section 80D
Here are a few things you should know to understand the tax deduction under section 80D better:
Health insurance tax benefits are great for your financial planning. Health insurance plans, including family floater plans that covers your spouse, dependent children and parents (whether dependent or not), makes you eligible for tax benefits.
Tax exemptions are valid only on the health insurance premium and not on additional charges, such as GST, service charge, etc. If your health insurance is comprised of critical illness cover add-on, then the premium paid for the add-on can also be claimed for tax deduction.
As per Section 80D, health insurance premiums paid in cash are excluded from the tax exemption clause. All other modes of payment such as demand draft, cheque, net banking, debit and credit cards are eligible for tax exemption. Health insurance premiums should be paid by only a taxpayer as the tax benefits cannot be claimed by a third party.
Disclaimer: The tax related information provided herein is merely for general understanding and reference. Please verify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein as the tax implications may vary depending upon the facts in each case/ interpretation by tax authorities. The tax laws are subject to change from time to time.
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