As a responsible person, you should ensure that your family does not suffer if you contract any ailment or diagnosed with a life-threatening disease. Apart from the benefits in terms of coverage, health insurance also provide some tax benefits which may work to your advantage.
Tax Benefits of Health Insurance:
The premium paid by you (policyholder) for your health insurance policy provides the following two benefits:
- Insurance coverage
- Tax benefits
As per Section 80D of the Income Tax Act, 1961, the premium may be deducted from your total income. Total income = gross total income (includes income from all heads). Taxable income = gross total income - deductions (under section 80D to 80U).
As per section 80D, a HUF or an individual can claim deduction for the following:
|Section 80D Deduction||
Amount of deduction:
The following table shows the amount of deduction for individuals and HUF:
|Individual HUF||Rs.25,000 (Premium paid or any payment made for preventive health check-up. The payment must be made for the benefit of the taxpayer, his or her spouse and children) Rs.20,000 (Premium paid or any payment made for preventive health check-up. The payment must be made for the benefit of the parents of the taxpayer) Rs.25,000 (contribution to central government health scheme. The payment must be made for the benefit of the taxpayer, his or her spouse and children ) Rs.30,000 Expenditure on the taxpayer’s health, his or her spouse, children or parents Rs.25,000 Rs.30,000 Premium paid or medical expenditure for senior citizen|
The following table shows the criteria and deduction available for medical expenditure under Section 80DD
|Individual/HUF, incurring expenditure on maintenance of dependent with disability (nursing, rehabilitation, Amount paid under any LIC scheme for maintenance)||Rs.1,25,000 (if the dependent suffers from severe disability)|
Section 80DDB covers deduction vis-a-vis medical expenditure on relative or self to the extent of Rs. 40,000 or the amount incurred by the assesse (whichever is less). Very senior citizens can claim up to Rs 80,000 as deduction while senior citizen can claim up to Rs.60,000 or amount paid (whichever is less).
Section 80U covers deductions vis-a-vis persons with physical disability. Persons suffering from any form of physical disability such as blindness or even mental retardation can claim Rs. 75,000 (financial year 2015-16) as deduction. Persons suffering from severe disability can claim up to Rs. 1,25,000 as deduction.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.