How to Save Taxes with Medical Expenses
Due to a sedentary way of life, we have become victims of a number of lifestyle-related diseases. The rising cost of healthcare expenses is because of a deteriorating health condition. Keeping this in mind, the healthcare insurance provided to you by your employer might not be sufficient and this is why you need to think ahead when planning for your family. Investing in medical insurance is an important step. Such an insurance plan will not only provide cover for medical expenses but also help you to enjoy the benefits of tax deduction. Listed below are various ways in which you can seek tax exemption.
Section 80D of the Income Tax Act
As per Section 80D, any individual who purchases a mediclaim policy will be allowed an exemption from tax. If you buy a policy for yourself, you can get a tax exemption up to INR 25,000. If you buy the policy for yourself and your parents, you can enjoy a tax deduction up to INR 55,000. If your parents are below the age of 60, the tax exemption limit for them will remain INR 25,000. If they are above 60, it will be INR 50,000.
If you incur an expense for a precautionary medical checkup for yourself and your family members who are dependent on you, then the limit will be INR 5,000. Hence, you can get a maximum tax benefit of INR 80,000 from a health insurance plan. It is advisable to purchase a critical illness insurance policy, which can be a useful insurance coverfor different types of critical illnesses and diseases.
Exemption for medical expenses
As per Section 10A of the Income Tax Act 1961, there is an exemption limit of INR 15,000 for medical expenses levied on yourself or your dependent family members. Incase the health insurance is provided by your employer, the amount of INR 15,000 will be saved from your taxable salary.
Exemption for health treatment of specially challenged dependents
As per Section 80DD of the Income Tax Act, 1961, there is a tax exemption limit ranging from INR 50,000 to INR 1 lakh valid for your spouse, parents, children, and siblings. If you are bearing any medical expenses of a disabled dependent family member, you will get a tax exemption of INR 50,000 and if the disability is more than 80%, the exemption is INR 1 lakh.
Exemption for medical treatment of dependents with specific diseases
As per Section 80DDB of the Income Tax Act, 1961, there is an exemption ranging between INR 40,000 to INR 80,000 if any of your family members suffer from a specific disease, which puts them beyond a 40% disability. For individuals up to the age of 60, the amount is INR 40,000. The exempted amount is INR 60,000 for individuals above 60 and INR 80,000 for those above 80. The specific diseases include cancer, kidney failure, AIDS, Thalassemia, and neurological syndromes. Hence, investing incritical illness insurancecan make a huge difference to your policy coverage.
It is important to understand that you do not need to invest in insurance only to save money in tax. You need to invest in health insurance to keep yourself and your family safe from health risks. Comprehensive health insurance for critical illnesswill cover you and your family from life-threatening diseases and will ensure that the out of pocket expenses for medication and treatment remain minimal.