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Things to Know About Tax Deductions on Health Insurance Premium
Buying a health insurance plan is essential, but several people refrain from investing in such plans, and prefer investing in fixed deposits, mutual funds, and gold. It is mainly due to the hesitation to pay the premiums calculated by a health insurance premium calculator, that one tries to consider other investment options. So, to encourage such people to buy health insurance plans in India, the Income Tax Act 1961 offers tax deductions on premiums of such insurance policies.
Let us understand these tax deductions on health insurance in detail here in this post!
7 Things to Know About Health Insurance Premium Tax Deductions
In India, taxpayers can claim tax deductions on health insurance premiums under specific conditions. Here are seven such factors to know about these tax benefits:
Section 80D
A policyholder with a comprehensive health insurance plan must be fully aware of the health insurance tax benefits under the Income Tax Act 1961. There is an exclusive Section 80D that mentions tax benefits for specific health insurance policies.
Have a look at the health insurance tax deduction under section 80D for different individuals:
| Individual Covered | Premium Amount Paid for Self, Family and Children | Premium Amount Paid for Parents | Tax Deduction Under Section 80D |
| Any individual or parents below 60 years | Rs. 25,000 | Rs. 25,000 | Rs. 50,000 |
| Any individual, family and parents above 60 years | Rs. 50,000 | Rs. 50,000 | Rs. 1,00,000 |
| Any individual and family below 60 years but parents above 60 years | Rs. 25,000 | Rs. 50,000 | Rs. 75,000 |
| NRI individual | Rs. 25,000 | Rs. 25,000 | Rs. 25,000 |
Deduction based on Policy
The amount of tax deduction will depend on the different slabs for varied types of health plans. The amount in these slabs may further fluctuate if there are any changes announced by the Government of India in the annual budget. So, make sure to choose your health insurance plan wisely.
Defined Benefits on Most Policies
Taxpayers can claim tax benefits on individual and family floater plans. The same deduction benefits may not be applicable for group health insurance plans. However, those who choose to pay an extra premium for group health insurance can also seek tax deductions.
Eligible Expenses
There are certain restrictions on enjoying tax benefits on health insurance premiums paid during a financial year. For instance, premiums paid for plans that cover only critical illness may not be eligible for tax deductions under Section 80D.
Additional Deductions
The Income Tax Act under Section 80D does offer deductions on health insurance premiums. But it also offers some additional deductions apart from the premium. A taxpayer can also seek heath insurance tax benefits on expenses related to medical treatments and any other preventive health check-ups.
Service Charge
While you will enjoy heath insurance tax benefits on health insurance premiums, you may not enjoy the deductions on the service tax on your health insurance premium payment. Income Tax Act 1961 under Section 80D excludes service tax charges from tax benefits.
Mode of Payment
It should be further noted that health insurance deduction in income tax for a health insurance plan will only be granted if the payment is made in a non-cash mode. The premium must be paid through a digital mode such as a debit card, internet banking, and so on. No heath insurance tax benefits can be fetched on such insurance premiums if they are paid in cash except the cash payment for a preventive health check-up.
How to Calculate a Health Insurance Premium?
Not all policyholders are required to pay the same premium for a health insurance policy. The premium amount may vary from person to person and policy to policy.
A health insurance premium is calculated depending on some factors such as:
- Entry Age
- Medical History
- Gender of the Insured Person
- Policy Type
- Lifestyle Habits
- No Claim Bonus
- Policy Tenure
Use a Health Insurance Premium Calculator
Avoid the hassles of calculating your premium by using an online health insurance premium calculator. It is a simple online tool that helps you to calculate the premiums of your health insurance policy. A policyholder needs to enter certain details such as age, and policy details, and this health insurance premium calculator will generate the premium amount due for payment.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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