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Last Updated : Feb 06, 2017 09:08 AM IST | Source: Moneycontrol.com

How to maximize tax savings under Section 80D?

Section 80D of the Income Tax Act in India allows a taxpayer to claim deductions of up to Rs. 25,000 on payment of medical insurance premium during a financial year. Senior citizens (above the age of 60 years) can claim Rs. 30,000 under this section.

Adhil Shetty

Having a health cover for self and family is not just a necessity to cover cost in case of medical emergencies but also a way to get relief from tax liabilities. You can avail tax benefits for every health policy meant for self, spouse, children and parents.   

Section 80D of the Income Tax Act in India allows a taxpayer to claim deductions of up to Rs. 25,000 on payment of medical insurance premium during a financial year. Senior citizens (above the age of 60 years) can claim Rs. 30,000 under this section, along with an additional deduction of Rs. 5,000, thus allowing them to claim up to Rs.35,000.
 

Let’s explore the benefits one can avail under Section 80D.
 
•    If you are under the age of 60, you can claim up to Rs. 25,000.
•    The tax law allows you to claim exemption of up to Rs.5,000 under this section for expenses incurred towards preventive health checkups for persons above the age of 60.
•    If the insurance premium is paid towards obtaining a cover for parents who are senior citizens, you can enjoy tax exemption of up to Rs. 30,000. This holds good if either or both are above the age of 60.
•    For uninsured super seniors (over the age of 80 years), medical expenditure incurred up to Rs. 30,000 can be claimed as deduction.
•    Tax benefits can be availed on premium payments made for more than one medical insurance policy up to the permissible limit.
•    Tax benefits under this section are available to Hindu undivided families (HUFs) other than individuals. It can be availed by any member(s) of HUF.
•    The taxpayer can also claim deduction on part payment made towards paying premium. The benefits are available on policies meant for parents irrespective of whether they are dependent or not.  
•    Non-proposers making premium payment are also eligible to avail tax benefits under this section.
 
Exclusions

There are some exclusions that need to be kept in mind in order to avoid confusions while filing claims for tax deduction under Section 80D.

•    For premium amount remitted by cash, deductions are not allowed under this section. Payment through any other modes such as credit cards, debit cards, electronic transfers, etc. is accepted.
•    The amount against which deduction is claimed should only include the actual premium amount payable. Service tax and other levies do not receive tax benefits.  
•    Under group health insurance policies such as corporate plans, the taxpayer can claim deduction only to the extent of additional premium amount paid to enhance the policy value.  
•    If the health insurance premium is paid towards obtaining cover for children who are not financially dependent, no tax benefits can be availed by the primary assesse.

The author is CEO of BankBazaar
First Published on Feb 6, 2017 09:08 am
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