How health insurance can help you save tax

Investing in health insurance plans can help taxpayers reduce their tax liability. Section 80D of the Income Tax Act offers tax benefits on payments related to purchasing and renewal of health insurance plans. Here’s a closer look at the tax benefits of health insurance.

Premium paid on health insurance for yourself and your family
Section 80D provides that when you invest in health insurance for yourself or your family members, the premium paid can be deducted from your total income. This, in turn, reduces your tax liability. Here are the other key features of the tax benefits of health insurance premiums.

• The premium can be paid to purchase the insurance policy or to keep it active.
• Only the amount paid in the relevant financial year can be deducted.
• For section 80D, the family includes spouse and children.
• The maximum amount of premium that can be deducted is ₹ 25,000.
• If you’re a senior citizen, this limit goes up to ₹ 50,000.

Premium paid on health insurance for your parents
The tax benefits of health insurance also extend to the premiums paid for insuring your parents’ health. You can claim the premiums charged and paid on your parents’ health insurance plans as a deduction from your total income. Other essential features of this tax benefit are explained below:

• The deduction allowed for the premium paid on your parents’ health insurance is in addition to the deduction allowed for the premium paid on your own medical insurance plan.
• Here too, the premium needs to be paid before you can claim it as a deduction.
• The maximum amount deductible is ₹ 25,000.
• If your parent is a senior citizen, this limit goes up to ₹ 50,000.

A summary of the tax benefits of health insurance
To better understand how the provisions of section 80D help you save tax, here’s a review.