Friday, January 4, 2013

Save Tax Under Section 80D

Everyone should purchase health insurance these days as it provides much needed money during medical emergencies. Also, under the Income Tax Act of 1961, the health insurance premium can be reduced from your income, thereby helping you save tax.

Under Section 80D of Income Tax Act, deduction of up to Rs 40,000 can be claimed in respect of premium  towards health insurance policy of various general insurance companies. Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children.as per following:


Individual taxpayer, spouse and dependent children
Addittional deduction for parents of the individual whether dependent or not
Total
General Deduction
15,000
15,000
30,000
Additional deduction if one of the insured is senior citizen
5,000
5,000
10,000
Total
20,000
20,000
40,000

Most of the health insurance companies are offering free medical tests as part of this. This deduction of Rs 40000 is apart from the normal medical bill claim of Rs 15000 per year which is offered as part of salary structure to employees by most companies.

For HUF assesses, premium paid for insuring the health of any member of the HUF, can be used for deduction. The premium should be paid by any mode of payment, other than cash. Premiums should not be paid from gifts received by you. Part payment of premium is allowed. For example, suppose your parents contribute 50% of their health insurance premium and you pay the balance 50% of their premium. In such a case, you could avail the deduction for the amount contributed by you and your parents too could avail deduction for their contribution.


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