Lower your tax liabilities burden with Section 80D

Posted on: Feb 4, 2021 | | Written by:

Lower your tax liabilities burden with Section 80D

Published on January 22, 2021 | Est Read Time: 3 min

The first quarter of the year has already begun and so has the taxation season. We are all looking for a way to reduce tax liabilities and save money. You can get dual protection for your savings with a comprehensive health insurance plan. Firstly, it covers the medical expenses that are incurred in a year, and secondly, you get a chance to save tax. The premium paid towards health insurance qualifies for tax deduction under section 80D of the income tax act 1961. It reduces your tax liability and hence health insurance is a vital investment to grow your savings and ensure your financial stability.

What is Income tax section 80D?
Section 80D of the Income Tax Act provides income tax deductions related to the medical insurance premium paid for you and your family members. You can claim a tax deduction for the health insurance premium paid for yourself, your parents, children, and spouse.

Section 80D Limits:
You can claim a tax deduction on the premium paid for yourself, your family (spouse and kids), and your parents. Below is the section 80D limit applicable to different categories of people across various age groups:
• For individual and family - Rs 25,000 tax deduction + Rs 5,000 health check-up, which sums up to Rs 30,000
• For individual, family, and parents- Rs 50,000 tax deduction + Rs 5,000 health check-up exemption, which sums up to Rs 55,000
• For the individual, family, and senior citizen parents - Rs 75,000 tax deduction + Rs 5,000 health check-up exemption, which takes the total tax deduction to Rs 80,000.
• For insured and the proposer are senior citizens- Max tax deduction limit is Rs 1 Lac

Points to remember while filing for a claim:
• Health insurance paid for a Government specified health scheme is eligible for a tax deduction
• Health insurance premium cannot be paid in cash to avail tax benefits
• Premium paid for sister, brother, grandparents, uncle, aunts, or any other relative is not eligible for tax benefits
• Premium paid for non-dependent children more than 25 years is not eligible for tax-exemption
• Group Health Insurance premium is not eligible for a tax deduction

Documents to file a claim:
The premium payment receipt and policy copy which shows the name of his family members and their relationship along with the age should be preserved to claim the deduction. Along with the policy the medical expenses receipts need to be submitted as supporting documents at the time of claim.

Income tax filing process:
You may file the tax online in a few simple steps and claim the exemptions applicable for yourself. All you need to do is create an account on the IT department portal and log in with your Income-tax id and password. The homepage tabs will carry instructions for form filling and importation of documents. You must fill the form and the exemption amount under the necessary columns and import all the supporting documents and submit the tax filing. Voila! Claim Done!

Let’s understand the tax benefit with a suitable example:
Rohit (Aged 40 years) opted for a health insurance plan covering himself, his wife (aged 36 years), and child (aged 8 years). He pays an annual premium of Rs 25,850. He also pays a health insurance premium of Rs 45,000 for the mediclaim policy covering his elderly father (67 years) and mother (62 years).
• The deduction Rohit is eligible to get for the health insurance policy that covers self, spouse and child is up to Rs 25,000
• The maximum deductible he is eligible to get for the mediclaim for the parents is up to Rs 50,000. So, the deduction he can claim in this case is Rs 45,000.
• The total deduction he becomes eligible for the year is up to Rs 70, 000.

Conclusion:
When you have financial responsibilities towards your family, opting for health insurance serves the dual purpose of securing your finances against rising medical bills and reducing the tax burden. . This is benefit is only available on the ownership of a health insurance policy. So buy the best health insurance plan with all the tax benefits and good coverage for 360-degree safety. While filing for your Income Tax Returns, submit proof for the sections that apply to you. All investments, premiums, expenditures, etc. if eligible, can be used to claim tax deductions.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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