Section 80D: Claim all tax benefits on health insurance premiums while filing income tax returns

In addition to popular tax-saving instruments like equity-linked saving schemes (ELSS), tax-saver fixed deposits, and employees' provident fund contributions, section 80D is also widely used to reduce your tax liability.

Salaried individuals who have opted for the old tax regime with exemptions should aim to claim tax breaks by submitting investment proofs during January and February. By doing so, you can prevent your employer from deducting excess tax from your salary. 

If you missed the deadline for filing the investment declaration, don't worry! You can still claim a refund for any excess tax deducted by filing your income tax return before July 31.

Tax Deductions for Health Insurance Premiums: Coverage for Self, Spouse, and Children

If you are below 60 years of age, Section 80D provides tax deductions of up to Rs 25,000 on health insurance premiums paid for yourself, your spouse, and your children. This is the maximum deduction available under this section for individuals in this age group.

The total deductions for health insurance premiums, including critical illness plans, are subject to this limit. If you have a multi-year health policy and pay premiums for multiple years together, it is important to claim the deductions proportionately. Instead of claiming the entire premium amount in one year, ensure it is divided over the period of coverage. 

According to Chetan Chandak, Director of TaxBirbal, many individuals mistakenly claim the entire multi-year premium at once, but it should be spread out based on the duration of coverage.

Claim Higher Deductions By Paying Your Parents' Premiums

If you are paying the health insurance premiums for your parents, you can qualify for an additional tax benefit of Rs 25,000. If your parents are senior citizens, this limit increases to Rs 50,000. 

This means that an individual who takes care of health insurance premiums for themselves, their spouse, children, and elderly parents can claim deductions of up to Rs 75,000 under section 80D.

Higher 80D deductions for senior citizens

If you are a senior citizen aged 60 or above and have health insurance policies, you can enjoy higher deductions. The limit for deductions is Rs 50,000 for yourself. 

Additionally, if you are paying premiums for your parent's health insurance policies, you can claim deductions of up to Rs 1 lakh. For example, if you are 61 years old and taking care of your parent's health insurance premiums are 88 or 90 years old, both of them being senior citizens, you can avail of the maximum deduction of Rs 1 lakh.

Deduction on preventive healthcare expenses

It is a beneficial practice to have regular medical check-ups, especially if you have chronic conditions like diabetes or hypertension. Not only does it help monitor your health, but it also qualifies you for a tax deduction under section 80D. 

You can claim up to Rs 5,000 for preventive health check-ups, within the overall limit allowed.

"Many taxpayers often overlook claiming this deduction. It is advisable to keep the receipts for your records, even though you do not need to submit them along with your income tax returns," advises Chandak. 

Additionally, you can also avail tax benefits for your parents' health check-ups.

"The limit for preventive health check-ups is Rs 5,000, which falls within the overall limit of section 80D. 

However, it is important to note that payments made in cash will not be eligible for the deduction," explains Bhavesh Shah, Senior Partner at the chartered accountancy firm Hasmukh Shah & Co.

Tax Benefits on medical expenses without health insurance

The tax advantages provided by this section are not limited to health insurance premiums alone. If you are a senior citizen and do not have coverage under any health insurance policy, you can still claim deductions on the actual health expenses you incurred throughout the year. However, please note that these deductions are subject to the overall limit of Rs 50,000 under section 80D.

If your children are covering these expenses, they can deduct them from their taxable income. However, it's important to note that the payment should be made through a mode other than cash. Make sure you have bank transactions and receipts as evidence of the payments made for your parents' healthcare expenses, advises Chandak.