How You Can Save Taxes with Medical Expenses?
Published On Apr 30, 2021 5:30 AM By KANIKA WADHWA
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According to the Income Tax Act of 1961, purchasing medical insurance is a necessary measure if you wish to benefit from tax deductions. Thus, buying a health insurance package for yourself and your loved ones (including parents) will save you not only money but also tax liability in the event of a medical emergency.
How You Can Save Taxes with Medical Expenses
Most financial planners advise you to start your financial preparation by choosing a good health insurance policy. We all have goals we want to achieve, and in order to do so, we must begin saving as soon as possible. Purchasing insurance plans, such as mediclaim policies, will help you avoid making excessive tax deductions on your hard-earned money. Don't be concerned about the annual policy premium you'll have to pay; instead, consider the big picture! What will you benefit from this initial investment in the future?
What Is The Aim Of Section 80D Of The Income Tax Act Of 1961?
The portion of your earnings that goes into purchasing medical care and preserving your health is critical to your financial planning and tax exemption. Anyone who purchases a mediclaim policy to cover hospitalisation costs, dental care, and medical tests is eligible for a tax exemption under section 80D.
Also Read: All About Health Insurance Tax Benefits
Lesser Known Facts About Tax Benefits in Health Insurance
How Much Money Would You Save By Purchasing Health Insurance?
- You will get a tax break of up to Rs. 25,000 if you purchase health insurance for yourself.
- You will get a combined tax gain of Rs. 55,000 if you buy it for your elderly parents and yourself. (Rs. 25,000 for yourself and Rs. 30,000 if it's a senior citizens' mediclaim policy)
- Your parents would not be considered senior citizens if they are less than 60 years old. The tax deduction cap for their health benefits will be Rs. 25,000 only.
- If you and other dependent family members (including your spouse, parents, and children) have precautionary medical checkups, the exemption cap is only Rs. 5,000.
- However, for those who have purchased a health care contract, the maximum tax deduction is just Rs. 60,000.
Our advice is that you don't need to buy medical insurance just to save money on taxes. It's not just an investment; it's a decision you should take to protect yourself and your loved ones from unexpected health threats while still saving money on taxes. It even covers you and your relatives in case of hospitalisation. Even if it may not seem to be urgent at the time, it will be too late if anything happens to your health or the health of your loved ones. Also, when it comes time to file your taxes, you'll be rushing from pillar to post to buy some random health insurance package in order to save money. As a result, making an educated decision will assist you in meeting both requirements.
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.