BENGALURU: Among the multiplicity of taxes, we pay a whopping amount on income tax every year. A common man needs to ingeniously think about how to save a portion of that income tax by putting the money into some other portfolio which will come to his aid in an hour of emergency.
Investing in health insurance solves the dual purpose of reducing income tax liability along with staying healthy. A health insurance will cover the cost of medical treatment in case of any unfortunate event along with other additional benefits like cashless hospitalization facility and domiciliary treatment expenses.
“The most important step in financial planning is to create an adequate health insurance cover, which helps take care of expenses,” explains Mayank Bathwal, CEO, Aditya Birla Health Insurance Co Ltd. “The government also encourages families to take health insurance coverage by financially incentivising this investment through tax deduction under 80D,” he adds.
According to P Nitish from Corporate Catalyst India, “Rising hospitalization costs make it imperative for a person to consider insurance cover for medical risks that he runs especially when work pressures are increasing and life-style is not well managed. The premium in health insurance increases according to age.” He tells us that since the tax slab considered is 30.9 per cent we need to “look at it as a 30 per cent discount to obtain health coverage.”
“Health Insurance as a tax benefit can be availed by any individual but with a ceiling of Rs 25,000 and Rs 30,000 (senior citizens) under 80D of Income Tax Act, 1961. The premium paid towards health insurance plan is deductible from the taxable income as per Section 80D of the Income Tax Act.
Additionally, the premium paid towards insurance policies for your parents also qualifies for deduction under this act. It is available on health insurance premium paid for spouse and children too,” says Parag Gupta, Bharti AXA General Insurance.
However, through Section 80 DD and Section 80U, differently-abled individuals or those who have taken insurance for a differently-abled dependent can claim tax benefit. A person with disability is allowed deductions of Rs 75,000, whereas a person with severe disability will be allowed deductions up to Rs 1.25 lakh under this section. One does not have to deposit any medical bills or premium receipts while claiming for deductions under 80U.
Shreeraj Deshpande, head of Health Insurance, Future Generali India Insurance Co Ltd says that various products are available in the market and the extent of cover or benefits varies between products. “People need to choose wisely between an array of products,” she says.