Save Tax while purchasing Health Insurance
Save Tax while purchasing Health Insurance
Health Insurance or Mediclaim is essential as it provides a comprehensive protection against health-related medical and financial emergencies. One major advantage of buying a mediclaim is to incur tax benefits that come under Section D of the Income Tax Act, India. The rate of income tax is different for different income levels, and thus, the income tax that we pay depends on our total earnings in a given year. Purchasing a healthplan can save up this tax. Read on to know more about Section D and invest your money wisely in the healthplan that suits you the best.
What is Section D?
- Section 80D of the Income Tax Act is meant for deduction of medical insurance premium for health care of the taxpayers, whether senior citizens or otherwise.
- According to the Budget 2008-2009, several beneficial changes have been made in the Section D of the Income Tax Act of India. This amendment is made by the Government as given in Memorandum to Finance Bill 2008.
How to save tax under Section D while buying a Mediclaim?
- This section covers medical insurance policies taken for self, spouse, dependent parents and children or any member of the family. Section D is applicable only on the persons mentioned and the tax law doesn't admit any other relatives except above in this section.
- In case of an individual, deduction is available on the Mediclaim premium paid by cheque on his own health or health of a spouse/dependent parents/dependent children.
- If part payment is done by self and part payment by the parent, both can claim deduction to the extent of their contribution subject to maximum allowed.
- This section provides a deduction of Rs 15,000 for premium paid towards health insurance, which includes Mediclaim and critical illness cover.
- In a case of senior citizens the deducible amount goes up to Rs 20,000. Health insurance takes care of the expensive medical treatment incurred during hospitalization resulting from a serious accident or illness and also covers pre- and post-hospitalization expenses. Hence, under Section D you save can save Rs 15,000 by buying a Mediclaim.
- This means, besides a tax exemption of Rs 15,000 on health insurance bought for your family, you can get a further exemption on the health cover(s) bought for your parents to the extent of Rs 15,000 (Rs 20,000 if they are senior citizens). Therefore, you are eligible for Rs 30,000, double the deduction from previous years.
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