A popular section of the Income tax Act which is well known to every Indian tax payer is Section 80C under which things like life insurance premium, investment into provident fund etc fall but lot of tax payers are unaware of Section 80D which can give them an additional tax savings of Rs55000 to Rs.60000 depending upon the age category they fall into.
Section 80D as generally known to tax payers as an Income tax Rule by which they can get tax exemption on the premium they pay towards health insurance plan or a best mediclaim policy. But to maximize tax benefits during the financial year 2016-17 this information is not enough. You need to understand the nuance of every element get the maximum benefit. Here are few facts which every tax payer should know to avail more benefits:
Paying premium for your parents: Generally you claim tax benefits for the premium that you pay towards your individual policy or for the family floater under which your wife, your children and your parents are covered so the maximum benefit that you can avail in this case is Rs.25000. Now especially in case of family floater where it is always advised to keep your parents out of the plan so that you pay a less premium, you can always have an independent plan for your parents who are senior citizens and get additional tax benefits of Rs.30000. So the maximum becomes Rs.55000 rather than just Rs.25000.So you have save Rs.30000 more.
Another important case of remember in this case is that if you are also in the age category of 60 and above and you are still paying for premium of your parents you can get an additional benefit of Rs.5000 so rather than enjoying Rs.55000 benefit now you can avail Rs.60000 of tax benefits.
Life Insurance riders: It not that just premium that you pay for health insurance plans qualify for Section 80D benefits but you can also avail benefits against Critical illness riders or medical insurance riders which are part of your life insurance plan. Even critical illness plans for specific diseases offered by General insurance companies also qualify for this benefit.
Health check ups: So you might think if you are pay a premium which is less than the maximum tax benefits of Rs.25000/ Rs.30000 then you might end up losing the benefits. But you should also know that the price that you pay towards preventive checkups also qualify for tax benefits under Section 80D to a maximum of Rs.5000.
Because of rising lifestyle disorders most prominent hospital have started to offer preventive health care packages so if you have subscribed to any of those packages you can easily claim the same as benefit.
Paying by cash: Yes, you have a disadvantage in this case. if you are paying you premium in cash as per Income tax guidelines you can claim benefits under Section 80D so it is always advised that your should always pay premium through cheque if you want to pay offline or use internet banking and credit cards to make online premium payments. But one should keep in mind that if are paying for health checkups through cash they do qualify for tax benefits.
As per popular personal finance rule don’t just invest to save tax but in case health insurance which is actually a cost we should always look at savings maximum from it. It is also advised that please do a online comparison of competing health insurance plans to save maximum before you buy. Please also give an additional importance in the points discussed above to avail maximum tax benefits in 2016-17