You can also save tax with health insurance
It's common knowledge that buying health insurance helps you to save tax. Under Section 80D of the Income Tax Act 1961, you can get a maximum tax benefit of Rs.15000 on health insurance premium paid. The exemption limits are as follows:
- An individual can avail an annual deduction of Rs.15000 from taxable income for health insurance premium paid for self and dependants. 'Dependents,' in this case, refers to spouse and children.
- In the case of senior citizens (aged 56 years and above), the annual deduction from taxable income goes up to Rs.20000.
- If you are paying the premium for your parents' health insurance, you can claim an additional tax benefit up to Rs.15000 under the provisions of Section 80D.
- If your parents are senior citizens (aged 56 years and above), the benefit goes up to Rs.20000.
- You cannot claim tax benefit on health insurance premium paid for your in-laws.
- Proof of payment of premium has to be furnished, in order to avail the tax benefit.
- Except cash, any mode of payment is acceptable for claiming tax benefit.
- The health insurance premium must be paid from your taxable income of that year only if you want to claim a deduction. If you have paid the premium from your savings or from gifts of money received by you, then you will not be eligible to claim tax benefit under Section 80D.