Put yourself in Usain Bolt’s shoes; imagine that in a 100 meter race, you are trailing till the 60th meter. In the last 40 meters you have two options. Either you fire up and turn up the heat or simply accept defeat and continue at the same pace.
The race against time to save tax is analogous to this situation. It is tax saving season again and everyone is busy hounding their Chartered Accountants with the same question. “How to save income tax?” In the last minute scurry of salvaging some money have you exhausted all your
tax saving options? Let’s be enlightened with another tax saving investment to save as much tax as possible. Did you know that your health insurance policy is a great tax saving tool?
Yes, along with protecting you against a financial tragedy due to an unforeseen hospitalization, your mediclaim policy also offers enticing tax benefits under section 80D where you can save up to 20,000 Rs. The savings go a step higher to 30,000 Rs in case you are a senior citizen. Therefore it is prudent to consider medical insurance as a
great tax saving investment.
To understand section 80 D in detail, let’s take Rahul’s example-
Rahul lives with his wife, daughter, and dependent parents. On the advice of his CA, he has taken two health insurance policies. One covering himself, his wife, and daughter and the other one for his parents.
Now there are a few scenarios we need to consider for understanding section 80 D.
Scenario 1: No one in Rahul’s family is a senior citizen. i.e. Of age 60 or higher.
In this case, Rahul will get a total income tax deduction of 40 thousand. 20 thousand for the first policy and 20 thousand for the other.
Scenario 2: Rahul’s parents are senior citizens.
In this particular scenario, Rahul will be eligible for a 20 thousand deduction on the first policy and since his parents are senior citizen, a 30 thousand deduction on the second one. So, his overall tax deduction will reach 50 thousand.
Scenario 3: Rahul is himself a senior citizen. Then obviously his parents would be senior citizens.
Both the policies will get a deduction of 30 thousand. Hence, the total tax deduction would be raised to 60 thousand.
Hence this tax season, let’s take a few lessons from Usain Bolt and leave all your tax worries behind with a medical insurance policy. After all, with the rising medical inflation rates it is essential to have a health insurance policy to fall back on.
Summing all of this into a table -
Deduction Limit for Each Policy
Deduction Under 80D (Rs.)
|Self, Family, Children||Parents|
|All below 60 years||20,000||20,000||40,000|
|Individual and family below 60 years but parents above 60 years||20,000||30,000||50,000|
Deduction on Preventive Healthcare Checkups
A Tax deduction on preventive health check up annually is available.The expenses incurred for health checkups up to Rs. 5,000 for each budgetary year can be claimed inside the aforementioned limit of Rs. 25,000 (or Rs. 30,000 all things considered) (Rs. 50,000 w.e.f. April 1, 2018) under Section 80D income tax.