Personal Tax Planning in India
Health Insurance and Tax Deductions
How premiums for health insurance and preventive check-ups reduce taxable income under the old regime, with higher limits for senior citizens.
Health insurance protects against large medical bills. Under the old tax regime, premiums also reduce taxable income, under what has long been called Section 80D.
The limits
- Up to 25,000 rupees for premiums covering yourself, your spouse and children.
- An additional 25,000 rupees for premiums for parents, rising to 50,000 rupees if parents are senior citizens.
- If you are a senior citizen yourself, your own limit rises to 50,000 rupees.
- Preventive health check-ups up to 5,000 rupees, within these limits.
- For senior citizens without insurance, certain medical expenses can be claimed within the limit.
So a taxpayer paying premiums for senior citizen parents could claim up to 75,000 rupees, or 1 lakh if they are also a senior.
Payment rules
Premiums must be paid by non-cash methods, except for preventive check-ups.
New regime
The new regime doesn’t allow this deduction.
Beyond tax
Health insurance is valuable for protection regardless of tax. Choose cover based on needs:
- Adequate sum insured.
- Room rent limits and co-payments.
- Waiting periods for pre-existing conditions.
Other health-related deductions
- Deductions for treatment of specified diseases.
- Deductions for disability, as covered in the disability money planning module.
A 35-year-old pays 20,000 rupees for his family's health insurance and 45,000 rupees for his senior citizen parents' policy. Under the old regime, he can deduct 20,000 plus 45,000, reducing his taxable income by 65,000 rupees.
Its main value is protection against large medical bills; tax savings are a bonus.
- The old regime allows deductions for health insurance premiums.
- Limits are 25,000 rupees for self and family and up to 50,000 for senior citizen parents.
- Premiums must be paid by non-cash methods.
- The new regime doesn't allow this deduction.
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