If you’re a person paying taxes, you might already know that health insurance is a great way to reduce the tax that you pay. But here’s all what you need to know about the top tax benefits of health insurance.
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Understand the Section 80D Income Tax Act
To explain the Government of India’s section 80D of the Income Tax Act, you as a tax payer can claim a tax deduction on medical insurance premium paid during the year. So, if the total premium you pay per year is 45000, this can be fully deducted under Section 80D of the Income Tax Act. This is explained in detail in the table below.Â
Claim for Preventive Health Checkup (PHC)
Preventive Health checkups are done to keep diseases at bay. Those under the age of 60, can claim a tax deduction of up to ₹ 5,000 per year for preventive health check-ups. The maximum increases to ₹ 7,000 for persons over the age of 60. The PHC allowance can be used only If you don’t meet the aforementioned health insurance income tax deduction limits.Â
To make this simple, Here’s a comprehensive table.
| Health Insurance purchased for | Deduction for Insurance Premium under section 80D | Claim Limit for Preventive Health Checkup | Maximum amount of Mediclaim Deductions that are available under section 80D | ||
| Self + Family | Your Parents | Self + Family | Parents | ||
| You (<60 years old) + family + Your parents (<60 years old) | Rs. 25000 | Rs. 25000 | Rs.5000 | Rs.5000 | 25000+25000= Rs. 50000 |
| You (<60 Years old) + Family + Parents (>60 years old) | Rs. 25000 | Rs. 50000 | Rs.5000 | Rs.7000 | 25000+50000 = Rs.750000 |
| You (>60 years old) + Family + Parents (>60 years old) | Rs. 50000 | Rs. 50000 | Rs.7000 | Rs.7000 | 50000+50000 = Rs. 1 Lakh |
| Hindu Undivided Family (HUF) | Rs.25000 | Rs. 50000 | Rs. 5000 | Rs. 7000 | Rs. 25000/50000 |
| Non-Resident Indians (NRI’s) | Rs. 25000 | — | Rs. 5000 | — | Rs. 25000 |
Other Deductions:
- Deduction Under Section 80DDB of the Income tax Act: Medical expenses incurred for the treatment of specific diseases or illnesses such as cancer, parkinson’s disease and others are also eligible for a tax deduction under section 80DDB. If you are under the age of 60, you may be eligible for a deduction of up to Rs 40,000 on the cost of treatment for certain illnesses each financial year. Â
- Deduction under Section 80DD of the Income Tax Act: If you have a dependent who is having a disability, you can get tax benefits of Rs. 75000 for disability with 40% and above, and Rs. 1.25 Lakh for disability of 70% and above.
Conditions to be followed to avail of 80D Tax Benefits:
There are a few conditions and rules that are needed to be met before you avail of the Tax benefit:
- The premium should not be paid in cash and it should be paid within the financial year.
- Receipt of payment of premium should be available.
- The maximum amount of deduction can be done only according to the Act.
- The premium should be paid by the person who is applying for a tax deduction.
- The tax deduction is applicable only if you pay for your family and your parents or dependents.Â
Now that you know the tax benefits, hope you are ready to get the best Health Insurance for you and your family.
Choose the right Health Insurance based on your needs and requirements. Visit Chola MS to get more information on health insurance.
