A health insurance not only protects your health but also helps you make your policy purchase tax friendly. This is because attractive tax benefit is an added incentive to buying a health insurance.
Section 80D of the Income Tax Act, 1961, and the main act governing our income tax rules, allows for tax benefits on purchases made for health insurance. Do note that this Section 80D is not the same as Section 80C (applicable to life insurance) wherein other form of investments/expenditure, too, qualify for the deduction, such as equity-linked savings scheme (ELSS).
The Section 80D allows you to receive tax deductions on premiums made for medical insurance for yourself and on behalf of your family. It also allows deductions over and above the exemptions from Section 80C.
Section 80D deductions:
Section 80D will help you in availing tax deductions on medical insurance premiums only.
Maximum Section 80D deductions for you and your family:
- Rs. 25,000 per year on health insurance premium for yourself and your family.
- Rs. 50,000 per year if you are a senior citizen.
Maximum Section 80D deductions for your parents:
- Rs. 25,000 per year on health insurance premium paid by you on behalf of your parents.
- Rs. 50,000 per year on premium payments for senior citizen parents.
Additional deduction:
A deduction of Rs. 5,000 can be claimed every year on expenses related to health check-ups. This limit includes the check-up expenses of all members in a family, including spouse, kids and parents.