How To Save Income Tax on Healthcare Expenses?
Published On Dec 30, 2020
Owing to the hectic routines and urban lifestyle, the health conditions of people are deteriorating day by day leading to an increase in the cost of healthcare. Hence, the health insurance provided by your employer is not enough to meet the rising health care expenses, as the sum assured would not be enough. However, in order to safeguard your family and yourself from the health risks that could possibly arise, you need to plan ahead.
Investing in a health insurance policy is a necessary step towards suitable financial planning. It is an important investment as it not just safeguards you and your family from medical expenses but also offers the benefits of tax exemption according to the Income Tax Act, 1961.
Health Insurance Tax Benefits Under Section 80D
Under section 80 D, a person is allowed to save taxes by the means of claiming for medical expenses incurred as a deduction from income before the tax is levied. Also, a policyholder can save taxes with a health insurance policy to apply for a deduction on tax. By buying a health insurance plan for yourself and your parents, you can save in the following ways:
- A policyholder is entitled to receive a tax deduction of Rs. 25,000 in case they purchase health insurance for themselves.
- In case you are buying for yourself and your parents( above 60 years in age), an overall tax benefit of Rs. 55,000 can be availed( the break up is as follows- Rs. 25,000 for self and Rs. 30,000 for senior citizens' health insurance).
- In case your parents are below 60 years of age, for them tax exemption would be Rs. 25,000 as they do not fall under the senior citizens' category.
- In case of preventive health checkups for self and other dependent members( spouse, parents, and children), then the limit for tax exemption is just Rs. 5,000.
- For people who have bought a health insurance policy, the maximum tax deduction limit is just Rs. 60,000. Additionally, the eligibility to claim tax deductions for non residents is Rs. 25,000 for the premium paid for health insurance for self and other family members. In case, an NRI purchases a health insurance policy for their parents, then the tax deduction for the same is Rs 25,000.
Health Insurance Tax Deductions Limit Under Sec 80D
Tax deductions limit under section 80 D is as follows:
- Eligibility for individual taxpayers on tax deductions for premiums paid towards health insurance plans for self, spouse, and dependent children is Rs 25,000.
- If the taxpayer is providing a premium for parents as well, then in that case they are eligible for another tax deduction of Rs. 25,000.
- If parents are senior citizens, above 60 years, then the tax deduction limit is Rs. 50,000 and if the taxpayer is a senior citizen then the tax deduction amount will be Rs 50,000.
An individual should not buy a health insurance plan just for the purpose of tax saving as it is not an investment tool. It is meant to safeguard you and your family against unforeseen medical expenses. Although many people refrain from buying a health insurance plan in order to avoid paying premiums, but it is an absolute necessity as it helps in keeping oneself prepared against unfortunate happenings that could arise in the future. So, by taking a well-researched and informed decision now, you can save yourself from the regret of not buying a health plan when the need arises in future.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.