Enhanced tax benefits for Health Insurance.
As the longevity of the average Indian goes up, health expenses of families would mount. That is why you can expect the role of health covers in our lives to increase. Most common health cover known is Mediclaim.
By just paying a small sum as premium on a mediclaim policy every year, one can claim reimbursement of expenses incurred for hospitalization. And when such premium also carries tax benefits, then there is no reason to wait for anything better….
The Income tax Act provides for various deductions for medical expenses incurred by a taxpayer. One such deduction is for the premium paid on the medical insurance policy popularly known as the ‘Mediclaim Policy’ under Section 80D of the Act.
The premium paid on a medical insurance policy taken by an individual for his own health or for the health of his spouse, parents or dependent children is eligible for deduction. An HUF is also eligible for such deduction on premium paid for family members.
Section 80D also covers payment of premium exclusively for Critical Illness Rider.
Note: The premiums paid to avail of this deduction by individual/HUF should be paid by any mode other than cash!
Tax kick:
Substitution for section 80D w.e.f. 1/4/2009
(Assessment year 2009-2010 and onwards)
Additional deduction for health insurance premium paid for parents.
In case the assessee is an individual
-An individual can claim a deduction upto Rs. 15, 000 in respect of payment made to keep in force an insurance on himself or his family (i.e. his wife and dependent children), as before.
-An individual assessee can now avail a total deduction of up to Rs 35,000 under Section 80D!
- According to the new proposed budget (2008-2009), an individual can now claim an additional deduction of upto Rs 20,000, under section 80D of Income Tax Act, for medical insurance premium paid for his/ her parent(s).
-If the parent(s) is not a senior citizen, individual gets additional deduction of Rs 15,000 instead of Rs. 20, 000
(This deduction is over and above the existing Rs 15,000 for premium paid on medical insurance for self and dependent family.)
-Also, the parent(s) need not be a dependent.
Incase the assessee is an HUF
Where the assessee is an HUF, the aggregate medical insurance premium paid to keep in force a medical insurance on the health of any member of HUF, the deduction allowable is upto Rs. 15, 000, as before.
If any member of the said HUF is a senior citizen (i.e. aged 65 years or more) the deduction will be upto Rs. 20, 000, as before.
To illustrate; For assessment year 2009-10, if Mr. A has paid medical insurance premium on his health and on the health of his wife & dependent children amounting to Rs.14, 000 and on the health of his parents, who are not senior citizens amounting to Rs.18, 000. Mr. A will be allowed a deduction of Rs.29, 000 (14,000 + 15,000, instead of only Rs.15, 000 allowed earlier). If either of his parents is a senior citizen then Mr. A will be allowed a deduction of Rs.32, 000 (14,000+18,000).
