The tax-saving season is in full swing as we reach the end of FY 2020-21. We’re just trying to find out how to save the most money on our taxes. So, how can a single taxpayer make the most of their tax rupees? If we follow the advice of financial experts, having decent health insurance coverage for ourselves and our families is a sure-fire way to become tax effective and save money. Health insurance policies decrease our taxable income and therefore our tax liability, in addition to providing financial coverage in the event of a medical emergency. Understanding Section 80D, on the other hand, is important if you want to get the most out of your health policy.
We can subtract health insurance premiums charged for ourselves, spouses, dependents, children, and even parents under Section 80D of the Income Tax Act of 1961. However, what are the specific tax benefits that we can hope to earn if we pay health insurance premiums for ourselves and/or other family members?
How does Section 80D work?
Section 80D, in basic words, reduces a person’s tax burden by lowering their taxable income. The health care premiums you pay for yourself and/or other family members, for example, will be deducted from your taxable income. It will not be deducted from the total amount of tax you would pay. Furthermore, the amount of tax benefits provided by Section 80D is determined by the insured’s age. In this regard, Section 80D operates in three ways:
- Section 80D allows you to deduct Rs. 25,000 for insurance for yourself, your parents, and your dependent children. If your parents are under 60 years old, you can deduct an extra Rs. 25,000 for their benefits, bringing the total deduction to Rs 50,000.
- The deduction sum is Rs. 50,000 if the parents are over the age of 60. In this case, you can assert a total deduction of Rs. 75,000, including Rs. 25,000 for yourself, your spouse, and dependent children, and Rs. 50,000 for senior citizen parents.
- The maximum deduction available under this provision increases to Rs.1 lakh if both the taxpayer and the parents are 60 years old or older.
Additional benefit of Rs. 5,000 with health check-ups
Health checkups add to the tax savings provided by Section 80D. Daily preventive health checkups can help diagnose diseases at an early stage, and many leading healthcare providers or hospitals provide comprehensive packages to keep your health in check. The good news is that you can subtract Rs. 5,000 from your income tax liabilities if you have a preventive health checkup. As a result, taking advantage of Section 80D’s extra value is a wise way to treat your income tax.
What to look for while buying health insurance?
Since health insurance is essential for navigating a variety of medical emergencies while still providing a significant tax advantage, it is also important to choose a policy from a reputable health insurance provider. Bajaj Allianz General Insurance Company is currently one of India’s most successful health insurance companies. It has been steadily improving and diversifying its policies over the years so that people can get health insurance at a reasonable price. From critical illness plans to family health insurance, Bajaj Allianz health insurance has designed its plans with the increasing cost of medical care in India in mind and offers a variety of benefits.
Bajaj Allianz health insurance is committed to ensuring that you get the most out of your money at all times. The tax advantages provided by Section 80D add to this convenience. You may also use an online health insurance premium calculator to figure out how much the insurance would cost.
Bajaj Allianz health Insurance provides innovative policies to allow people to adopt good health insurance practises. You can also take aid of a health insurance premium calculator to settle for the best as per your need. While purchasing health insurance is not a financial investment at face value, it will help protect you against unforeseen incidents that may result in significant financial losses.
Furthermore, health insurance provides you with the opportunity to greatly reduce your tax liability thanks to Section 80D benefits. It’s time to find the best health care package for you and your family and get on the path to financial independence.