Tax benefits on health insurance

While calculating one's taxable income, the premium paid for a health insurance policy can be deducted from the total income under Section 80D of the Income Tax Act, 1961.

This deduction is over and above the one available under Section 80C, which is for a limit of up to Rs 1 lakh.

For individuals who are less than 65 years of age, the amount of deduction available is up to Rs 15,000 on mediclaim policy for self, spouse and dependent children.

A further deduction of Rs 15,000 can be claimed for paying the premium for one's parents. The limit goes up to Rs 20,000 if either parent is a senior citizen, irrespective of his/her dependency status.

In order to claim tax deduction, the premium payment has to be done either through a cheque or credit card. Cash payment does not qualify for deduction.

The tax benefit for paying the premium of a single policy can be split in case of multiple contributors. Each contributor can claim the deduction subject to overall limits.

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