One of the top benefits of buying a health insurance policy—besides financial security—is the tax-saving opportunity. As per the Income Tax provisions, the tax assessees can claim a deduction under section 80D of the Income Tax for the premium paid towards a mediclaim insurance.
In this article, we will discuss in detail the tax rebate on the mediclaim policy and the procedure to avail of this tax rebate.
Tax Rebate on Mediclaim Policy
If you want to reduce the tax liability on your annual income, the best way to do so is to buy a health insurance policy and claim the 80D deduction on the premium paid against a health cover. The individual or HUF taxpayers must claim the deduction under section 80D while e-filing their income tax returns online.
Here, it is essential to know in detail about this tax deduction.
How to claim the 80D deduction?
You must duly file your Income Tax Returns (ITR) for the preceding financial year and claim the medical insurance tax benefit there and then. You need to follow the following procedure to avail of the health insurance tax benefit u/s 80D:
Step 1.Login to the Income Tax E-filing Portal.
Firstly, you need to log in to the Income Tax E-filing Portal to file your income tax return.
Step 2.Select the ITR Form.
On the Income Tax e-filing portal, you will select the type of income tax return form among ITR-1 (Sahaj) and ITR-4 (Sugam), which are meant for individual taxpayers.
Step 3.Select Eligibility for Mediclaim Tax Benefit.
After selecting the ITR form, click on the head “Tax deductions” under the “Gross Total Income” head. The next window will show you various columns with questions asking you whether you are eligible for various tax deductions. On the 5th column, the question will appear— “Are you eligible to claim deductions in respect of payments towards medical insurance premium and/or preventive health check-up and/or medical expenditure?” Select “Yes” and proceed.
Step 4.Fill in Schedule 80D
On the next window, the 80D tab will open. Click on the Edit option given on the 80D tab. Schedule 80D will open on the next tab, with various heads to be filled.
Step 5.Fill in Details of Self & Family
Under column—1 of Schedule 80D, specify whether or not you and your family members (excl. parents) are senior citizens.
- If you select “Yes”, both options a & b will open.
- If you select “No”, option b will automatically close.
Step 6.Enter the Amounts of Health Expenses
Under options ‘a’ & ‘b,’ you have to enter the amounts of the health insurance premium and preventive health check-up. These amounts will exclude the amount of GST paid.
- If there are no senior citizens in your family, the total deduction amount will not go above the ₹25,000 limit by default.
- If senior citizens are there in your family, the total deduction amount will not go above the ₹50,000 limit by default.
Similarly, the preventive health check-up amount won’t go above ₹5,000 limit by default.
Step 7.Fill in the Details of your Parents
Under column—2 of Schedule 80D, specify whether or not your parents are senior citizens.
- If you select “No”, option b will automatically close.
- If you select “Yes”, both options a & b will open. Besides, the total deduction limit will double to ₹50,000.
- Additionally, a third option of “Medical Expenditure” will also appear. Here, you can enter the details of all the medical expenses you have incurred during the year for your parents, whether or not they were hospitalized.
- Medical expenditure may include various tests, OPD expenses, the cost of prescribed medicines, and the like. You can claim a deduction of up to ₹50,000 on this expenditure u/s 80D.
After entering all the details, hit the “Submit” button to claim the deduction. The Income Tax Department will assess all the details you have filled in and adjust your taxable income with the total deduction amount. The difference amount will be given to you as a tax refund later on.
What is Preventive Health Check-up?
The tax deduction under section 80D also includes a deduction for any payment towards preventive health check-ups up to Rs 5,000. Preventive health check-up refers to a regular check-up done for general well-being and includes routine tests. It helps in detecting possible symptoms of an ailment. In accordance with the provisions of section 80D of the Income Tax Act, a deduction of Rs 25,000 is available, in which you can also claim any payment towards preventive health check-ups up to Rs 5,000.
This is how you can easily claim your mediclaim tax benefit, while filing your income tax returns. However, there’s an important guideline in this regard. You can claim the tax deduction under section 80D only if you have paid the premium amount via net banking, debit or credit card, cheque, or demand draft. Importantly, you can’t claim the health insurance tax benefit for the cash payment of the premium.
The individuals can also claim the deduction mentioned above for self, spouse, dependent children, or parents. Hence, the health insurance policy acts as a great tax-saving investment wherein an individual can save up to ₹1 lakh tax on mediclaim premium for self, spouse, dependent children and parents above 60 years of age.
Disclaimer: Please verify the policy details and coverage with the official policy documents. Also, kindly consult a professional medical expert to verify the details of health concerns.
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