Health insurance offers attractive tax benefits. The premium you pay towards health insurance is tax deductible under Section 80(D) of Income Tax Act, 1961.
While computing the total income of an assessee, being an individual there shall be a deduction of sum specified in Sub-Section (2) Clause (a) and (b) of Section 80(D).
Sub-Section (2) - Where the assessee is an individual the sum deducted from his/her taxable income shall be the aggregate of the following:
- The whole amount paid to effect or to keep in force an insurance on the health of the assessee or his/her family (here family means spouse and dependent children of the assessee) but not exceeding Rs. 15000
whole amount paid to effect or to keep in force an insurance on the health of
parent or parents of the assessee but not exceeding Rs. 15000 in aggregate
For senior citizens, the limit has not changed; it is Rs. 20000 per financial year. To make the full utilization of the said limit, you can add the premiums you paid for health insurance and the premiums paid for the critical illness rider or any other health insurance rider under life insurance policy.
Deductions under section 80(D) is available over and above the deductions under section 80(C) that has a limit of Rs. 1 lakh.
In short, health insurance payments do not just cover the health of yourself and your family; it is financial prudent too, allowing you to save a packet on income tax.