It is very important to choose tax saving options according to your financial goals. Many times the investment in the name of saving tax also misleads. Especially when on the other hand, it also proves to be very beneficial at times, when you are also able to make better use of tax saving options. Like health insurance taken for health for parents. Health insurance is an integral part of any insurance portfolio and investing in it saves tax. If you take insurance for your parents, then your tax will also be saved.
Like other different financial options, parent’s medical insurance is not only beneficial but has also become a necessity in today’s times. Apart from the health insurance available in the job, there should also be a separate health insurance. The coverage of health insurance available in the job is very less. Considering the increasing age and medical condition of the parents, it is an important advice to have separate insurance for them.
How is it beneficial to save tax?
Like health insurance policies for you, your spouse and children, a health insurance policy for your dependent parents also helps in saving tax under Section 80D of the Income Tax Act, 1956. Let us know how your parent’s health insurance can boost your tax savings for the current financial year.
In the first case, if both your parents are below 60 years of age, you can claim a deduction of up to Rs 25,000 on health insurance premium. Add to this the benefit of deduction on health insurance premium up to Rs 25,000 for self, spouse and dependent children, and your total savings under the above provision increases to Rs 50,000 in a financial year.
In the second case, if you and your spouse are below 60 years of age and the parents are senior citizens, you can claim tax exemption of up to Rs 50,000 on health insurance premiums on their behalf. This is in addition to the Rs 25,000 tax credit on health insurance for you, your spouse and your children.
The reason for the significant increase in tax deduction on account of premiums is that there has been a tremendous increase in health insurance premiums for senior and very senior citizens. If your parents are above 60 years of age, then by insuring the senior parents other than you, you will be able to save tax up to Rs 75,000 per financial year.
things to note
It also depends on which health insurance you are taking for your parents. It is possible that the full 80D limit on insurance premium has not been fully utilized.
– You can also utilize the remaining allowance by scheduling a preventive health checkup for them. As the name suggests, this test is done to evaluate the health status of the person and to rule out any sudden deficiency.
You are allowed to spend up to Rs 5,000 per year on preventive health check-up under section 80D. This deduction is included in the total amount that you and your parents are allowed to earn.
– If your parents get a discount of Rs 50,000 on the insurance premium but they pay Rs 42,000, you can claim an additional Rs 50000 for them to get such a test done and make better use of the allotted amount Huh.