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Explained: Key tax benefits on health insurance

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While many of us would appreciate the fact that health insurance can be of immense medical and financial benefit during an emergency, what is realized less often is that investing in such a policy is one of the most efficient and effective tax-saving instruments.

Explained: Key tax benefits on health insurance
A good health insurance plan should be one of your top priorities especially once you start earning. While many of us would appreciate the fact that health insurance can be of immense medical and financial benefit during an emergency, what is realized less often is that investing in such a policy is one of the most efficient and effective tax-saving instruments. Premium paid towards health insurance policies can help in substantially reducing your tax liabilities as it qualifies for income tax exemption under Section 80D of Income Tax Act of 1961.
Several tax saving incentives are available with respect to health insurance. Let us have a look at some of them:
Income Tax Exemption Under Section 80D
The premium paid for a health insurance policy is deducted from taxable income under Section 80D of the Income Tax Act. The deductible amount can be from Rs 25,000 and can go up to Rs 50,000 if parents are below 60 years of age. Where Individual and family are below 60 years but parents are above 60 years, the deduction is up to Rs 75,000 and where both individual, family and parents are above 60 years, the deduction available is up to Rs 1 lakh.
Deduction on Preventive Medical Checkups
You can save tax on preventive health checkups on a yearly basis. Under this feature, you can claim a maximum amount of Rs 5,000 subject to the overall limits as mentioned above.
Tax Benefits on a Multi-Year Health Insurance Policy
People who purchase multi-year health insurance plans now have the option of receiving both premium discounts and tax benefits on a pro-rata basis. When purchasing multi-year health insurance policies, you can receive tax benefits according to the number of years the policy is acquired for. For example, if you purchased a 3-year health insurance policy for Rs 30,000, you will be eligible for Rs 10,000 tax credit.
Most financial advisors and websites will suggest health insurance as an extremely efficient way of saving tax. An adequate health insurance plan will not only secure you and your family during unforeseen circumstances, but it is also the wisest way to save tax. So, it is recommended to buy an adequate and comprehensive health insurance policy to ensure the protection of your health and wealth.
The author, Subramanyam Brahmajosyula, is Head – Product Development at SBI General Insurance. The views expressed are personal
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