Health insurance acts as a great financial backup to tackle unforeseen medical expenses that may drain your savings. But along with financial security, health insurance also offers tax benefits, boosting your savings. This article will provide a detailed overview of the tax benefits of health insurance. Also, read on to know things you need to claim for tax exemption under Section 80D of the Income Tax Act.
What are the tax benefits of health insurance?
The Indian Government provides tax benefits to encourage more people to purchase health insurance policies and protect themselves from rising healthcare costs. The Indian Income Tax Act of 1961 allows for tax deductions on premiums paid for health insurance policies under Section 80D. This means that policyholders can claim tax deductions for the premiums paid under their health insurance policy.
How do you claim tax benefits for health insurance?
Here is how you can raise claims for tax benefits under health insurance:
- Section 80D: Claim deductions for premiums paid on health insurance for yourself, your spouse, children, and parents.
- For self and family: Up to Rs. 25,000 can be claimed for individuals below 60 years; Rs. 50,000 for senior citizens.
- For parents: You can claim up to Rs. 25,000 for non-senior citizen parents, or Rs. 50,000 if they are senior citizens.
- Mode of payment: Premiums should be paid via cheque, credit card, or digital modes to qualify for deductions.
- Preventive check-ups: You can also claim deductions for preventive health check-ups, up to Rs. 5,000 annually.
Things to consider when claiming tax exemption under Section 80D of the Income Tax Act
The following points will help you claim tax exemptions against your health policy smoothly:
Premium payment: To claim tax benefits under Section 80D, policyholders must pay the health insurance premium through a cheque, demand draft, or online banking.
Eligibility criteria: Policyholders must ensure that they meet the eligibility criteria for claiming the tax benefits under Section 80D.
Age criteria: The age of the individual or their parents play a vital role in determining the tax benefits.
Policy document: It is essential to keep a copy of the policy document that reflects the premium payment details to support the tax deduction claim.
Income tax slabs FY 24-25 have been revised to reflect changes in the tax structure and benefit eligible taxpayers accordingly.
How much health insurance tax benefit can be claimed under section 80D?
Section 80D of the Income Tax Act allows taxpayers to claim deductions for premiums paid on health insurance policies. The tax benefits are applicable for policies covering self, family, and parents. Here’s how much can be claimed:
For self and family (spouse, children):
- A maximum of Rs. 25,000 can be claimed if the policyholder and their family members are below 60 years of age.
- A maximum of Rs. 50,000 can be claimed if the policyholder or any family member is a senior citizen (aged 60 or above).
For parents:
- You can claim up to Rs. 25,000 for insurance premiums paid for non-senior citizen parents.
- For senior citizen parents, the deduction limit increases to Rs. 50,000.
Preventive health check-up: You can also claim up to Rs. 5,000 for preventive health check-ups, which are included within the overall limit.
These benefits help reduce taxable income, thus lowering the overall tax liability.
A comprehensive view on income tax deductions for health insurance
Here a quick look at the income tax deductions for health insurance policies in India.
Category |
Tax deduction |
For self and family (everyone below 60 years) |
Rs. 25,000 |
For self, family, and parents (everyone below 60 years) |
Rs. 25,000 + Rs. 25,000 |
For self and family (everyone below 60 years) and senior citizen parents |
Rs. 25,000 + Rs. 50,000 |
For self and family (eldest member above 60 years) and senior citizen parents |
Rs. 50,000 + Rs. 50,000 |
Health insurance covers medical expenses and reduces taxes, saving you up to Rs. 31,200* under Section 80D of Income Tax Act, 1961. |
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