Health insurance policy is one of the most significant plans that one should have in the portfolio. It provides the much-needed coverage in case of any medical emergency and also acts like a tax saving avenue by providing tax exemption under Section 80D of the Income Tax (I-T) Act.
According to experts, if the annual income of citizens fall under tax liability, they must surely have health insurance policy so that income tax exemption can be claimed to a certain extent. This exemption is over and above the deductions claimed under section 80C of the I-T Act.
Who Is Eligible?
Every individual or HUF can claim a deduction under Section 80D for their health insurance which is taken from the total income in any given year. The benefit can also be taken from buying the policy to cover spouse, dependent children or parent.
How Much Benefit Can Be Claimed?
Any individual who pays annual health insurance premium for self, spouse or dependent children can claim benefit under section 80D up to Rs 25,000 (for age below 60 years), explains Roopam Asthana, chief executive officer and whole-time director, Liberty General Insurance.
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If the individual is a senior citizen (>60 years) and a resident of India then the limit prescribed for the benefit is up to Rs 50,000.
"If both the taxpayer and the parent whom the medical covers have been taken for are aged more than 60 years, the maximum deduction that can be availed under this section is to the extent of Rs 1,00,000," according to ClearTax.
How Can One Claim Deduction?
At the time of buying policy, the insurer shares an 80D certificate or tax certificate that can be submitted while filing to claim tax benefits, explains Vivek Chaturvedi, head of marketing and direct (online) sales, Digit Insurance.
However, it must be noted that the premium should not be paid in cash (to claim deduction in ITR).
Further, the receipt of the premium paid by the individual along with a copy of the policy could be required to be submitted for claiming deduction.