Health insurance is a
necessity that can also help you save taxes. Generally, you can save tax on
health insurance premium for a maximum of Rs 1 lakh in case you and your
parents are above the age of 60 years. But did you know that you and your spouse
can save more tax on health insurance premium beyond the Rs 1 lakh limit
(assuming that you and your spouse earn independent taxable income)?
Under section 80D of the
Income tax act, a deduction of Rs 25,000 can be claimed for health insurance
premiums including preventive healthcare check-up costs for yourself, spouse
and your children. Further, if you buy health insurance for your parents, you
can get an additional deduction up to Rs 50,000 from your income if your
parents are senior citizens. This way you can get tax-saving deduction benefit
up to Rs 75,000.
If your parents below 60 years of age, then you can get an additional deduction of Rs 25,000. Hence, the maximum tax-saving deduction that you can get on buying health insurance is up to Rs 50,000.
If your parents below 60 years of age, then you can get an additional deduction of Rs 25,000. Hence, the maximum tax-saving deduction that you can get on buying health insurance is up to Rs 50,000.
On the other hand, if the
policyholder and his/her parents' age is above 60 years, then he/she can get an
additional deduction of Rs 50,000. Thus, in such a case, the policyholder can
get a maximum deduction benefit for Rs 1 lakh.
How can you maximise tax benefit
on the entire family's income?
If your spouse is also an earning member, then he/she can also claim deduction from income of up to Rs 50,000 by buying health insurance for his/her parents. This way your spouse can help in reducing his/her taxable income and therefore, of the family as a whole.
If your spouse is also an earning member, then he/she can also claim deduction from income of up to Rs 50,000 by buying health insurance for his/her parents. This way your spouse can help in reducing his/her taxable income and therefore, of the family as a whole.
Rajat Mohan, Partner, AMRG
& Associates said that, suppose the taxpayer is female and married, she can
also buy health insurance policy covering family members and can claim
deduction under section 80D for premiums paid for herself, her husband, her children,
and her parents. "Hence, in a similar manner you and your spouse can buy
separate health insurance policies for your family and respective parents and
claim deductions under section 80D and save more tax on your overall family's
income, ," said Mohan.
However, Archit Gupta,
founder and CEO, Cleartax.in said, "You can only claim deduction under
section 80D on health insurance bought for your parents and not for your
parents-in-law. Also, the deduction is available irrespective of whether your
parents are financially dependent or not," he added.
This way, your spouse can
buy health insurance for her parents and thereby help in maximising the overall
tax-saving deduction benefit on the entire family's income. You can save taxes
for up to Rs 1.5 lakh or more (in case you and your parents are above the age
of 60).
Here's how much a married
couple can save on taxes under section 80D during a particular financial year.
Maximising overall tax-saving deduction benefit on the entire family's income under section 80D by purchasing health insurance
Maximising overall tax-saving deduction benefit on the entire family's income under section 80D by purchasing health insurance
Assuming that only one
health insurance policy is bought for the family and also, each spouse buys
insurance for their respective parents.
Can you claim maximum deduction
in case of having a single parent?
In case one of the insured parents passes away the other parent can continue with the same the policy. In such a scenario, the policyholder can claim the tax deduction benefit according to the actual premium paid for the policy. Anand Shrikhande, CEO and Founder, Quickinsure Insurance Brokers said, "You can continue to renew the policy with one member/parent and claim the premium as paid for one member/parent which will be the actual premium paid or Rs 50,000 (whichever is lower). The member/parent who dies is deleted from the policy and the other member/parent continues as insured."
In case one of the insured parents passes away the other parent can continue with the same the policy. In such a scenario, the policyholder can claim the tax deduction benefit according to the actual premium paid for the policy. Anand Shrikhande, CEO and Founder, Quickinsure Insurance Brokers said, "You can continue to renew the policy with one member/parent and claim the premium as paid for one member/parent which will be the actual premium paid or Rs 50,000 (whichever is lower). The member/parent who dies is deleted from the policy and the other member/parent continues as insured."
Alok Agrawal, Partner,
Deloitte India said that whether an individual pays health insurance premium
for his single parent or both parents, as per the provisions of Income-tax Act,
he would be eligible to claim a deduction of the total amount of premium paid
subject to a maximum of Rs 25,000. This limit increases to Rs 50,000 in case
the parent of the individual is a senior citizen (i.e., age is 60 years or more
at any time during the financial year). "However, you can avail the above
deductions only if the payment is made by any mode other than cash," he
said.
What policyholders should know
It is important to note that you should always take advice from a qualified/registered financial planner before buying health insurance. Amit Chhabra, Head- Health Insurance, Policybazaar.com said, "Health insurance shouldn't be bought mainly for tax-saving purpose, you should buy it to reduce your financial stress in case of medical exigencies."
He said that it is advisable to buy a policy with a large sum insured rather than buying two policies with smaller sum insured. The ideal way to buy health insurance is that the spouse should buy a policy with maximum cover for self and family including parents. "And, if you want to maximise your tax benefit and reduce family's tax liability, then one of the spouses can buy a health insurance policy only for his/her parents. You should know that spouses can claim deduction for health policy bought for respective parents but not for in-laws," he said.
It is important to note that you should always take advice from a qualified/registered financial planner before buying health insurance. Amit Chhabra, Head- Health Insurance, Policybazaar.com said, "Health insurance shouldn't be bought mainly for tax-saving purpose, you should buy it to reduce your financial stress in case of medical exigencies."
He said that it is advisable to buy a policy with a large sum insured rather than buying two policies with smaller sum insured. The ideal way to buy health insurance is that the spouse should buy a policy with maximum cover for self and family including parents. "And, if you want to maximise your tax benefit and reduce family's tax liability, then one of the spouses can buy a health insurance policy only for his/her parents. You should know that spouses can claim deduction for health policy bought for respective parents but not for in-laws," he said.
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