Everything You Need to Know About Health Insurance Tax Benefits!
Updated On Nov 27, 2023
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Health insurance policies, in addition to reimbursing medical expenditures, may also be used to save money on taxes. Section 80D of the Income Tax Act of 1961 provides policyholders with a large tax credit for health insurance premiums paid to purchase health insurance policies. Policyholders, whether self-employed or salaried, are eligible for tax advantages under the Income Tax Act. Taking use of tax benefits decreases the policyholder's yearly tax burden, providing him or her with the dual benefit of health coverage as well as tax deductions. Every health insurance coverage allows you to claim tax breaks on the premiums you pay, regardless of whether the policy is owned by the proposer, his or her spouse, children, or parents. When purchasing health insurance for parents, make sure to receive the needed coverage for all conceivable medical issues rather than only seeking bigger tax benefits. This will aid in the selection of the most appropriate health insurance coverage.
Exemption from Income Tax In accordance with Section 80D
The premium paid for a health insurance policy is deducted from taxable income under Section 80D of the Income Tax Act. The maximum deductible amount is Rs. 25,000, which can be increased to Rs. 50,000 for elderly persons (with effect from 1 April 2018). This means that a person can deduct up to Rs. 75,000 from his or her taxable income.
In exceptional circumstances, where both the proposer and his parents are over the age of 60, the deductible amount might be increased to Rs. 1,00,000 (Rs. 50,000+Rs. 50,000).
Different Tax Saving Scenarios Under Section 80D
Scenarios demonstrating eligibility and deduction for saving tax under Section 80D Deduction:
1. You and your parents must be under the age of 60- Claims of up to Rs. 25,000 are permitted for the self, family, and children. Additional claims of Rs. 25,000 are permitted against the premium paid for parents. Rs. 50,000 is the whole sum.
2. You and your family are under 60, but your parents are above 60 - Claims of up to Rs. 25,000 are permitted against the premium paid for self, family, and children. An extra claim amount of Rs. 50,000 for the premium paid for parents. 75,000 rupees is the whole sum.
3. You, your family, and your parents over the age of 60 - Claim up to Rs. 50,000 against premium paid for self, family, and children. Furthermore, parents can receive up to Rs. 50,000 for premiums paid. The whole sum is Rs. 100,000.
4. HUF (Hindu Undivided Family) - Up to Rs. 25,000 (premium paid for self, family, and children) and Rs. 25,000 (parental premium) can be claimed. Total tax advantages for parents = Rs. 25,000, accessible only if they are senior people.
5. Non-resident individual = Claim amount of up to Rs. 25,000 for premium for self, family, and children. Parents are only eligible for tax breaks if they are over the age of 65. As a result, the total sum is Rs. 25,000.
Documents Required for Income Tax Deduction Claim
To claim an income tax deduction, you must provide your premium payment receipt as well as a copy of your insurance policy, which must include the names of your family members, their ages, and their relationship to you. If you pay the premium for your parents, you must get an 80D certificate from the health insurance provider, which will require you to give payment information in your name.
Endnotes
Health insurance policies are significant not only because they provide financial advantages, but also because they provide coverage for a wide range of medical emergencies. As a result, it is important to select health insurance coverage supplied by a reputable insurance firm. However, with so many opportunities for tax savings, you must submit your ITR properly before the due date, have your paperwork ready, and always provide accurate information.
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