While preparing to buy health insurance plans for yourself or your family, you must have heard that you can also enjoy tax benefits from it. In India, you can get tax advantages due to the application of Section 80D of the Income Tax Act while calculating your taxable income.
This blog will discuss the eligibility criteria, what deductions you can expect, and how you can maximise the benefits through health insurance.
Who is Eligible for Tax Deductions Under Section 80D?
Follow these pointers to find out if you are eligible for Section 80D tax deductions:
1. Individuals and Families
One is eligible for tax deductions on premiums paid for his/her self’s health insurance and spouse’s or dependent children’s health insurance.
2. Parents
If you pay premiums for parents (below 60 years) you are eligible for tax deductions. If their age is above 60 you are eligible for higher tax deductions under Section 80D.
3. Hindu Undivided Families (HUFs)
HUFs are eligible for tax benefits for premiums paid for members of HUF including the sole earner, dependent children, spouse, and parents.
What Deductions Can You Expect Under Section 80D?
You can expect the following deductions under Section 80D of the Income Tax Act:
- Premiums you pay for health insurance for dependent children, parents, spouse or for self can get you a deduction of up to Rs. 25,000 for every financial year. The deduction limit is Rs. 50,000 for taxpayers or insured individuals above 60 years of age.
- Expenses incurred due to medical reasons for parents (who do not have health insurance) who are more than 60 years old can bring you deductions up to Rs. 50,000.
- An exemption of Rs. 5,000 is available for expenditure on preventive health check-ups. Here, the overall ceiling is Rs. 25,000 and Rs, 50,000 depending on the case.
- The overall deduction limit is Rs. 1 lakh which includes premiums paid for dependent children, self and spouse (provided any one of them is a senior citizen) and for senior citizen parents.
How to Maximise Tax Benefits With Health Insurance?
The potential of maximising the tax benefits of a health insurance plan lies in your strategic planning and execution capability. Here’s how to do it right:
1. Plan and Purchase Early
Buy health insurance at the beginning of a year so that you can take full advantage of the deductions and avoid last-minute rushed decisions.
2. Considerations for Family Coverage
If you want to buy health insurance for your parents who are senior citizens, do not include them within the family floater plan. Buying a senior citizen health plan lets you enjoy an increase in the total deductible amount.
3. Schedule Annual Health Check-Ups
You can increase the permissible tax deductions by scheduling annual medical check-ups.
4. Get Multi-Year Policies
You can avoid an increase in income tax rates by paying premiums for multiple years at once. It locks in the current rates and provides greater benefits.
5. Maximise Your Limits
If your annual premium cannot exhaust the deduction limit, think about opting for additional covers like top-up plans, and so on.
6. Maintain Regular Renewals
Maintaining a regular renewal is important to show your commitment to steady health coverage which is a precondition for some deductions under 80D.
The Bottom Line
Overall, we hope this blog gives you a brief idea about how you can strategically buy health insurance plans and make claims to maximise tax deductions. You are also aware of the several deductions available. With this knowledge, you can start investing in health insurance and better manage your finances.
The post Save Money and Stay Healthy: Maximising Tax Benefits with Health Insurance (Section 80D) appeared first on Daily Excelsior.