In this article I will be writing about the tax benefits for medical insurance. It is very common that most of the companies will enforce their employees to take the medical insurance policies. It is mostly compulsory in the companies. Interestingly most people not aware that the premium paid on the medical insurance is deducted from the taxable income. That means it is tax exempt up to the limit specified in the Income Tax provisions. This article will explore some interesting facts about the tax benefits on medical insurance. I am looking for the feedback after reading the article. You can subscribe to our future articles here.
Section 80d for Medical Insurance
- Many are aware that section 80c helps to save up to Rs.100000 by investing on the various schemes like Insurance policies, Mutual
Funds, Home Loans, etc. There is many other sections which helps to save the tax amount from your pocket. Section 80d is one among that for tax deduction, while paying the medical insurance premium. This section provides certain limitations and rules for the maximum amount can be exempted. - Under section 80d, a person can claim the tax deduction of up to Rs.15000 for the medical insurance premium for self,spouse and dependent children.
- More than that he can claim further Rs.15000 for his parents medical insurance premium. This is Rs.20000 in case his parents fall in seiner citizen(above age 65).
- It is important to note that the medical insurance premium should not be paid by cash, to avail the tax benefit.
X has taken two insurance policies, one for himself, spouse and dependent children and the other one for his dependent parents who are senior citizens. He pays an annual premium of Rs 10,000 & Rs 22,000, respectively, for these two policies. Now, let’s determine the amount of exemption available to X u/s 80D for each insurance policy separately.
In the first case, he will be eligible to claim a deduction of only up to Rs 10,000 i.e. amount of premium actually paid subject to a maximum of Rs 15,000. In the second case, where he has taken a policy for his parents, he would be eligible to claim a deduction towards the premium paid for Rs 20,000, which is the maximum limit. In total, he would be able to claim deduction of up to Rs 30,000 (i.e. Rs 10,000 + Rs 20,000) in respect of both the policies.
Summary
This article explains the basic idea on how to avail the tax benefits for medical insurance and the maximum limit on the exemption. There is more examples can be provided with the different scenarios. I will come up with another article on medical insurance and tax benefits. Thank you for reading the article. Please post your opinion on the comments section.
July 19, 2009 at 10:32 am
Nice and informative articles about investment, tax etc.
I recently did a new mediclaim policy for myself and spouse on a govt. based general insurance company, paid by cash.
I noticed this point in your post: “It is important to note that the medical insurance premium should not be paid by cash, to avail the tax benefit.” I checked this on Incometaxindia site as well under section 80D and it says the same thing.
When claiming the exemptions, we just submit the receipt or statement to the employer. How the “should not be paid by cash” condition would come into effect then?
July 20, 2009 at 7:05 pm
HI Govardhan ,
Yes..When I check with the Incom Tax India website also they mentioned that paid by Cheque only. It is better you can talk to your employer whether it is valid to pay the cash.
Thanks,
Krishna
July 22, 2009 at 8:45 pm
krishna,
Thanks for the reply. Yes I did check with the employer and they were fine with cash payment for the mediclaim policy of self and spouse. However, the cheque payment is a must if we’re paying for parent’s medical policies as there won’t be any proof otherwise that we have paid from our pocket. The cheque instrument number will be displayed on the mediclaim receipt for verification.
July 22, 2009 at 8:52 pm
HI Govardhan,
Thank you for the clarification. That would help other readers to know the process.
Thanks,
Krishna
September 4, 2009 at 4:59 am
“Hi,
Thanks for your informative article about tax benefits of medical insurance & but I think people must be first of known with that & some measures must be taken to provide information to the people & tools like this http://www.simpleinsurance.co.in/ which help people to choose & plan their insurance according to their needs & budget will surely be helpful in this task.”
January 14, 2011 at 8:27 pm
if my investments are exceeding Rs. 1,00,000/-, will i get tax exemption under sec 80d.
April 9, 2012 at 8:23 am
Section 80D allows a deduction of maximum Rs.15,000/- for self and ,in addition another additional Rs.20,000/- for parents who are senior citizens. My question is, if I am a senior citizen myself and I have no parents, what is the maximum allowable deduction under section 80D?
July 5, 2012 at 7:27 am
I want to know whether gross premium on health policy should be considered or net premium.