- You can avail of a maximum claim amount of Rs.5000 every financial year against preventive health check-ups.
Medical coverage with a suitable health insurance policy is one of the best investments one can make. It not only helps in getting the utmost medical help but also provides excellent financial assistance. Moreover, it also offers an opportunity to save your income tax under Section 80D. So, before finalising your investment in health insurance, ensure to know all you can about Tax Planning to save on income tax. But, what is Tax Planning? It is an essential part of financial planning that serves a dual purpose. One, it helps in saving annual income tax and two, it helps you meet your financial goals in case of a medical emergency. Following are some of the ways to reduce your tax liability under Section 80D of the Income Tax Act and more.
Health Insurance for Parents
Under section 80D, you are eligible to claim for a tax benefit in case of premium payment for health coverage availed by your parents aged 60 years or above—a deduction of up to Rs. 50,000 per year is allowed.
Preventive Health Check-Ups
You can avail of a maximum claim amount of Rs.5000 every financial year against preventive health check-ups. The deduction is applicable for you, your spouse, children and parents. For senior citizens above 60 years of age, the deduction limit for preventive health check-ups is Rs.7000 per year.
Premium Payment Modes
If the premium payment for a health insurance policy is made through banking modes such as demand draft, cheques, credit/debit cards or net banking, you are eligible to avail of a tax benefit. Only in the case of preventive health check-ups, cash payments are eligible for tax deduction claims.
Tax Reduction under Section 80D’s sub-sections
Tax benefits for the treatment of senior citizens or very senior citizens for critical illnesses are provided under Section 80DDB for up to Rs. 40,000, Rs. 60,000 (senior citizens) and up to Rs. 80,000 (very senior citizens) per year. Under Section 80DD, tax benefits for treatment of a dependent with a disability are provided. The eligible deduction is up to Rs. 75,000 or Rs.1.25 lakhs depending on the severity of the disability.
Type of health insurance
There are two types of health insurance that are eligible for tax deduction. Indemnity-based health insurance plans that cover the cost of hospitalisation and Defined-benefit health insurance plans that pay a lump sum irrespective of actual hospital expenses. Premiums for both indemnity-based and defined-benefit health insurance plans are eligible for tax deduction under section 80D.
Tax Reduction under Section 17
Under Section 17, an employee’s medical expenses paid by the employer using the employee’s salary as part of the medical allowance are eligible for a tax reduction of up to Rs. 15,000 per financial year.
These were some of the top tax benefits provided by the health insurance policies. Chola MS understands the need to protect your and your family’s health and hence offers its health insurance policy providing umbrella protection, financial assistance, and emotional/mental support.