Deduction under section 80D is allowed when you buy or renew an insurance policy to insure the health of your family – yourself, your spouse, or your dependent children or parents (both for dependent & not dependent). Remember to make these health insurance payments by any means but not cash.
The insurance purchased by you should be approved by IRDA (Insurance Regulatory & Development Authority) – this is required for you to be able to claim deduction under this section and will make you feel more secure about your investment when its IRDA approved. Beginning Assessment Year 2014-15 this deduction will also be allowed on contribution towards health schemes of Central & State Governments.
The total deduction available under this section is limited to Rs 15,000 for you/ your spouse and dependent children. However, in case you or your spouse is a senior citizen the deduction allowed is Rs 20,000.
An additional Rs 15,000 is allowed for premium paid for parents and in case parents are senior citizens the amount allowed is Rs 20,000.
Therefore, you are allowed to claim a maximum of Rs 40,000 under this section! That is surely some tax saved!
Preventive health checkups are also covered under Section 80D. However, the maximum deduction allowed is Rs 5,000 which is within the overall limit of Rs 15,000 stated above (or Rs 20,000 as the case may be).
Please note the amount that will be considered towards this deduction shall not include any service tax or other charges, and the amount that will be considered is only the pure premium amount.
Do grab the benefit of securing the health of your family as well as claiming the tax benefit!