Here’s how you can save income tax up to Rs 1 lakh by buying health insurance plan – The Financial Express
Even before you start saving for your goals, buying a health insurance plan is suggested by the financial planners.
The last date to save tax for the financial year 2021-22 is March 31, 2022. In order to save tax, if you have already exhausted the limit of Rs 1.5 lakh available under Section 80C, you may consider tax saving under Section 80D. Under section 80D, premium paid towards a health insurance plan, up to a certain limit based on age, will give you the tax benefit, which is over and above Section 80C limit. You may save income tax up to Rs 1 lakh by buying a health insurance plan if you and your parents are above age 60 i.e. senior citizens. There are exclusive senior citizen health insurance plans as well.
The tax benefit that you can avail on the premium paid towards any kind of health insurance policy falls under section 80D of the Income Tax Act, 1961. The maximum tax benefit is capped at Rs 25,000 or Rs 50,000, however, the actual tax benefit will depend on your age. So, if you are above a certain age, the total deduction that you may avail is Rs 1 lakh.
“Health insurance premium can be claimed as tax deduction up to Rs 25,000 for persons under 60 and up to Rs 50,000 for those aged 60 and above. It means, if you are below 60 years and want to buy a health insurance plan for yourself and for your parents (at least 60 years), the total tax benefit can be availed up to Rs 75,000. If both you and your parents are aged 60 years and above, then the maximum deduction that can be availed is up to Rs 1,00,000,” says Pankaj Arora, MD & CEO, Raheja QBE General Insurance Company. The premium paid will bring your gross total income by an equal amount thus lowering your tax liability.
Even before you start saving for your goals, buying a health insurance plan is suggested by most financial planners. Any major illness or even any casualty requiring hospitalisation of a few days may result in a hospital bill running into lakhs. A health insurance plan comes at a fraction of a cost for a sum insured (coverdage) that the insurer commits to pay to the hospital. Having purchased a health cover for adequate coverage, one may need not dip into existing savings or borrow from friends, relatives.
“The Covid-19 outbreak highlighted the stressful financial burden of treatments, hospitalization and medical expenses that an adequate insurance cover offers in the uncertain times. Not just Covid-19, a health cover ensures you don’t have to compromise your savings to meet the rising medical costs because of any illness. A health insurance plan with adequate coverage is, therefore, a must-have for the entire family,” says Arora.
The tax advantage of section 80D is available on all health cover plans such as Individual plans or Mediclaim, Family Floater plan, Critical illness plans, health riders of life insurance plans and even other health insurance variants.
Tax benefit is only a fringe benefit that comes along in a health cover. It’s always better to buy adequate coverage for self and all family members to take care of hospital bills at the time of hospitalisation.
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