Many investors know that health insurance qualifies for tax benefits. They also know that if you submit medical bills to your company, you end-up saving tax.
But, did you know that there are many other tax benefits that one gets on medical treatment and under various provisions of the Income Tax Act.
1) Tax benefit for handicapped family member under Sec 80DD
If you have an individual who is handicapped and are paying his or her insurance premium, you cam claim tax benefits.
Depending on the handicap persons disability you can claim tax deduction. You can claim deduction for medical expenditure incurred as well.
Now, the family member has to be a spouse, son or daughter (any child), parents and brother or sister (siblings) can be your handicapped dependents.
You cannot claim the deduction for all and sundry.
The claim amount has been raised from Assessment year 2016-17, to Rs 75,000 for individuals who do not suffer severe disability.
For those suffering from severe disability the deduction allowed is Rs 1.25 lakhs. You may have to provide evidence and should have a copy of the disability certificate issued by the central or state government medical board to claim deduction.
Tax Benefits under Sec 80U of the Income Tax Act
The tax benefits are similar to those mentioned above, but under Sec80U, you claim the tax benefit for self.
So, what this means is that if you are suffering disabilities yourself, you can claim deduction of up to Rs 1.25 lakhs, if it is severe and Rs 75,000, if it is less severe.
What is important to remember is that it does not matter, whether you have incurred medical expenditure, you can still claim deductions.
Tax benefits under Sec 80D of the Income Tax Act
One can also claim tax deduction under Sec 80D of the Income Tax Act. This is for the health insurance one pays for self and the family.
The tax deduction allowed under this section is Rs 25,000 for individuals, other than Senior Citizens. For Senior citizens the amount it is Rs 30,000.
The health insurance premium has to be for self, spouse and dependent parents.