It’s common knowledge that buying health insurance helps you to save tax. Under Section 80 D of the Income Tax Act 1961, you can get a maximum tax benefit of Rs.15000 on health insurance premium paid. The exemption limits are as follows:
- An individual can avail an annual deduction of Rs. 15000 from taxable income for health insurance premium paid for self and dependents. ‘Dependents,’ in this case, refers to spouse and children.
- In the case of senior citizens (aged 56 years and above), the annual deduction from taxable income goes up to Rs. 20000.
But here’s a tidbit that might help you save more tax than you think:
- If you are paying the premium for your parents’ health insurance policy, you can claim an additional tax benefit up to Rs.15000 under the provisions of Section 80D.
- If your parents are senior citizens (aged 56 years and above), the benefit goes up to Rs. 20000.
Put together, the two facts listed above come down to this:
The health insurance premium that you pay for yourself, your dependents (spouse and children) and your parents, are all considered for tax benefit under Section 80 D of the Income Tax Act 1961.
Therefore, you can claim a deduction up to Rs. 30000 on your taxable income, and if your parents are senior citizens, the deductible amount goes up to Rs. 35000.
However, there are a few conditions:
- You cannot claim tax benefit on health insurance premium paid for your in-laws.
- Proof of payment of premium has to be furnished, in order to avail the tax benefit.
- Except cash, any mode of payment is acceptable for claiming tax benefit.
- The health insurance premium must be paid from your taxable income of that year only if you want to claim a deduction. If you have paid the premium from your savings or from gifts of money received by you, then you will not be eligible to claim tax benefit under Section 80 D.
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