Your health insurance can help you save tax, here’s how

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Health insurance not only protects one’s finances from unexpected expenses but also brings down the tax liability. The Income Tax Act 1961 provides tax deduction on premium towards health insurance. The taxpayers can claim an income tax deduction of up to Rs 25,000 on health insurance premiums. However, for senior citizens, the deduction limit goes up to Rs 30,000.

According to tax expert Gauri Chadha, under Section 80D of the Income Tax Act, 1961, an individual can avail deduction for health insurance premium paid for self, spouse, dependents, children, and even parents.

Answering one of the callers on Money9 Helpline, Chadha explained the eligibility aspect of the tax relief.  Swapnil Roy from Kolkata had asked if he can avail of tax relief on the health insurance premium he had paid through his credit card.

“You can just claim for the premium you have already paid. So whatever you have paid by credit card or cash you are eligible for tax relief for that,” Chadha said.

Though some employers provide medical reimbursement to their employees, wherein the office bears the expenses for their hospitalization, that amount is fully taxable.

Section 80D of the IT Act reduces a person’s tax liability by decreasing their taxable income.

The health insurance premium that a person pays for himself/herself and for other members of the family gets subtracted from the taxable income.

A deduction of Rs 25,000 can be claimed under section 80D on insurance for self, spouse, and dependent children. An additional deduction for the insurance of parents is available up to Rs 25,000 if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000.

Watch the full Money9 Helpline episode here: