A health insurance policy not only keeps you guarded against the medical emergencies but also offer certain tax benefits. The Section 80D of the Income Tax Act - 1961 allows you to avail certain deductions from your taxable income in lieu of the premium paid towards your medical insurance plan.
Provisions under Section 80D
Section 80D offers tax exemptions to individuals as well as Hindu Undivided Families (HUF) from the total taxable income in lieu of the health insurance premium payment. An individual can avail these tax benefits if he/she is paying health insurance premiums for self, spouse, dependent parents or children.
Age based tax benefits
Under Section 80D, if an individual is paying health insurance premiums for self as well as his/her family, he/she can get tax deduction of up to Rs. 25,000 from the taxable income. Additionally, the policyholder can get extra tax exemption of Rs. 25,000 if the premium is paid for parents who are less than 60 years of age. In case the taxpayer’s parents are senior citizens, i.e. above 60 years of age, the additional tax deduction can go up to Rs. 50,000.
For taxpayers above the age of 60, the cumulative tax benefits can be as high as Rs. 1,00,000. The breakdown is such that the senior citizen policyholder is entitled to tax deductions of up to Rs. 50,000 for paying health insurance premiums for self, spouse and dependent children, whereas, an additional deduction of Rs. 50,000 can be availed against the premiums paid for his/her parents.
Preventive healthcare benefit
The expenses made on preventive health care check-ups are also eligible for tax deductions, up to a limit of Rs. 5,000. This tax benefit is well within the ambit of the overall tax exemption limit of Rs.25000 or Rs. 50,000, as applicable.
Health insurance, hence, should form an extremely vital component of one’s financial planning. Apart from providing the financial security against the medical contingencies, the extra edge that it offers in terms of tax benefits makes it one of the most profitable avenues to include in your financial portfolio.
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