How to claim tax deductions on health insurance premium?

Tips and tricks to claim tax deductions on health insurance premium

Income Tax Act has provisions wherein the health insurance premiums of a taxpayer can be deducted from his taxable income. This could lead to some substantial savings depending upon the amount covered by health insurance and what a taxpayer can claim as a deduction in income. This blog shall go through this in detail with topics such as eligibility, the process of claiming, and some tips to maximize benefits while claiming tax deductions for health insurance premiums.

Understanding Tax Deductions under Section 80D

What is Section 80D?

Under Section 80D of the Income Tax Act, individuals and HUFs are entitled to claim deduction for insurance premium paid for health insurance. This gives taxpayers an opportunity under Section 80D to invest in health insurance and makes it easier to manage healthcare spending by earning tax relief.

Eligibility Conditions

Conditions to claim deduction under Section 80D:

The health insurance policy must be in the name of the taxpayer, spouse, children, and parents.

The premium can be paid in modes as specified under Income Tax Act like cash, cheque, or digital payment.

Deductions Available under Section 80D

For Self, Spouse and Children

The individual also gets the right to deduct the amount paid by him for health insurance for himself, his spouse, and dependent children up to ₹25,000. If the insured is a senior citizen above 60 years of age, then this limit would go up to ₹50,000.

For Parents

This benefit is also available in the case of health insurance cover for parents for which deduction of up to ₹25,000 can be claimed. In the case of senior citizen, this amount increases to ₹50,000. So, if both the individual taxpayer and his/her parents come under the category of being senior citizens, the entire amount can be claimed as up to ₹1,00,000 (₹50,000 for self and family + ₹50,000 for parents).

Preventive Health Check-ups

Taxpayers can claim up to ₹5,000 in preventive health check-ups. However, aggregate deductions, including paid premiums and preventive health check-ups, cannot exceed the following limits.

How to claim tax deductions on health insurance premium

To claim tax deductions on health insurance premiums, you must follow these steps:

Check your eligibility: You can claim a deduction on the health insurance premium paid for yourself, your spouse and dependent children up to a maximum of Rs. 25,000 under Section 80D of the Income Tax Act.

Check the type of health insurance policy: The policy must be a health insurance that covers you and your family members against medical expenses. The policy can be purchased from any insurer.

Keep the proof of payment: You should keep a record of the premium paid during the financial year. The proof of payment can be in the form of a receipt or an online statement showing the premium paid.

Calculate the deduction: You can claim a deduction of up to Rs. 25,000 for the premium paid for your family members (self, spouse and your dependent children). Under Section 80D, if a person pays health insurance premiums for their parents, then he can claim an extra deduction of up to Rs. 25,000.

File your tax returns: You can claim the deduction while filing your income tax return for the financial year. Make sure you enter the correct details of the premium paid under the relevant section of the tax return.

Eligibility criteria: To claim tax deductions on health insurance premiums, you should be an individual or a Hindu Undivided Family (HUF). The proposer who has remitted the premium is eligible for the Tax exemption. Tax exemption is not eligible if premium payment is made by cash.

Types of health insurance policies: The policy should be a health insurance policy that covers you and your family members against medical expenses. It can be a policy purchased from any insurer.

Tax benefits for senior citizens: Senior citizens can claim a deduction of up to Rs. 50,000 for the premium paid for themselves or their spouse. This is in addition to the deduction amount of Rs. 25,000 that can be claimed for dependent children or parents who are not senior citizens.

Overlapping deductions: It’s important to note that the deduction claimed under Section 80D cannot be claimed under any section of the Income Tax Act.

Summing up

In conclusion, claiming tax deductions on health insurance premiums is an important aspect of tax planning. By understanding the eligibility criteria and deduction limits, you can reap the tax benefits provided by the government and secure your family’s health.