With the rising cost of treatments for various illnesses getting out of the reach of the middle class, it is wiser to pay for a health insurance premium than bear out-of-pocket expenses for medical treatments. Tax deductions under Section 80D on the premium paid towards your health insurance as well as those of your parents are just one more incentive to do so.
Here are a few ways in which you can take care of your parents’ health with income tax exemptions:
- If your parents avail annual healthcare check-ups, you can get deductions of upto ₹ 5,000 under Section 80D.
- Additionally, ₹25,000 is allocated as tax benefits for parents’ healthcare needs if they are below 60 years of age. This limit extends to ₹30,000 for senior citizens between 60 to 80 years of age, excluding the deduction for annual health check-ups mentioned above.
- If your parents are senior citizens, you can get deductions of ₹30,000 for premiums paid towards health insurance. Any tax deductions for health check-ups would be included under this as well.
- If any of your parents have a severe disorder such as cancer, renal failure, Parkinsons or certain other diseases, you are provided tax deductions under Section 80DDB. As per this section, while upto ₹60,000 is provided for treatment of specific illnesses for senior citizens, upto ₹80,000 in deductions can be availed for super senior citizens, i.e. if your parents are above 80.
- Tax benefits upto ₹75,000 are also provided under Section 80DD for medical treatment, nursing, rehabilitation of any of your dependents including parents with a disability. For a serious disability, this limit has been extended to ₹ 1.25 lakh.
- If you are provided with any medical allowance by your employer for treatment expenses incurred by dependents, you can get deductions of up to ₹15,000.
All of the above deductions can be claimed per financial year only. All payments made towards the health insurance premiums of your parents should be made by you, either through net-banking, debit or credit card, cheque or bank draft. Keep in mind that any cash payments won’t get you tax benefits for parents’ healthcare needs. Also service tax and cess charges on premium payments are not eligible for tax exemption.