Overview
Purchasing a Medical Insurance plan for yourself and family members doesn’t only protect you financially but also helps you save yourself from the tax burden. Under Section 80D of the Income Tax Act, you can claim a tax deduction, which maximises your savings. Section 80D is one of the best options to claim tax deductions for the premiums paid towards the Health Insurance policy. In this article, we will delve into the details of Section 80D, providing insights on important things to remember when claiming the 80D deduction.
Understanding Section 80D Deduction
The Government of India has announced Section 80D of the Income Tax Act, 1961 to instigate people to purchase Medical Insurance plans and protect themselves and their family members against unforeseen medical expenditures. Under Section 80D, individuals can claim tax benefits and deductions on the premiums paid towards the Health Insurance policies during the year. It is a one-stop solution that helps you maximise tax savings and secure insurance premiums.
5 Important Things to Remember When Claiming Section 80D Deduction
When claiming tax deductions under Section 80D on Health Insurance premiums, it’s important to know the criteria that will help you save on taxes. So, here is a list of 5 important things to remember when claiming a Section 80D deduction.
- Eligibility Criteria for Deductions on Health Insurance Premiums: The first thing you must know while claiming tax deduction is the age and number of insured persons in a Health Insurance policy. Here are the tax deductions available under Section 80D.
- You can claim a tax deduction of up to Rs. 25,000 if you are paying your Health Insurance premium for yourself, your spouse and dependent children.
- You can claim an additional deduction of up to Rs. 25,000 if you are paying premiums for your parents (below 60 years). But, if your parents are senior citizens, then the deduction limit increases up to Rs. 50,000.
- Avoid Cash Payments for Medical Insurance Premium: To avail tax benefits for your Health Insurance premium, you must avoid cash payments for the premiums. Instead, you should choose other secure modes of payment, such as debit or credit cards, net banking and cheque.
- GST Deduction on Health Insurance Premium: GST paid on Medical Insurance premiums is applicable to claim tax deductions under Section 80D. The total premium amount of a Health Insurance plan also contains GST charged at the rate of 18%. Hence, you can claim a deduction on the total premium amount that includes GST. When submitting the investment proof, it is essential for salaried individuals to provide complete information about the premium paid towards the Medical Insurance policy.
- Tax Deductions on Multi-year Health Insurance Policy: It is preferable to purchase a multi-year Medical Insurance policy, instead of buying and renewing the health plan every year. The multi-year Health Insurance Policy allows you to avail a long-term policy discount offered by the insurance company. In such cases, you pay a lump sum premium and can claim tax deductions proportional to the number of years of the policy period, under Section 80D.
For instance, Aman pays a total of Rs. 60,000 for a 3-year Health Insurance policy. He can claim a tax deduction of Rs. 20,000 for each year under Section 80D.
- Save Necessary Documents: It is not required to submit any documentation for claiming tax deductions under Section 80D of the Income Tax Act. However, it is advised to maintain some necessary documents, including Medical Insurance premium receipts, medical cost receipts, hospital bills and any other documents and receipts that demonstrate the medical expenditures made during the year. Hence, maintaining a record of all medical expenses is necessary to provide proof for claiming deductions under Section 80D.
Conclusion
It is quite simple to claim the tax deductions if you have valid proof of medical expenses, hospital bills and receipts of payments towards Health Insurance premiums. Also, if you have complete knowledge and understanding of Section 80D deductions, limits and its benefits, then you can confidently maximise the tax savings through a Medical Insurance policy. So, consider these important things while claiming tax deductions under Section 80D.
If you want to buy a Health Insurance policy, then visit ACKO and get a suitable plan for yourself and your loved ones.
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