The right kind and amount of medical insurance can not only be useful in paying off bills towards hospitalization and treatment but also in saving taxes. Section 80D of the Income Tax Act, 1961 provides for deduction on net income before calculating taxes. Mintgenie of HT’s sister publication Live Mint has explained the ways to save income tax on medical expenditures on the individual or their dependants.
Under Section 80D of the IT Act, individuals can claim a deduction of ₹25,000 for the premium paid for health insurance for self, spouse and dependent children.
An additional deduction of up to ₹25,000 can also be claimed for insurance of parents aged 60 years or below. For parents aged above 60, the maximum deduction amount is ₹50,000.
Tax exemption under Section 80DDB can be claimed on the amount spent on treatment of specific illnesses for the individuals or any of their dependants, provided the dependants claiming the deduction are solely dependent on the filers’ finances.
A deduction of up to ₹40,000 can be claimed for dependants less than 60 years old while a maximum deduction of ₹1 lakh can be claimed for senior citizens.