When you pay mediclaim premium up to Rs. 40,000 during a financial year, for self, spouse, dependant parents or children, it is considered as a deduction from income. The payment of the premium should be made out of taxable income, by any mode except cash. Hence, the taxable salary reduces up to maximum of Rs. 40,000 (view table). This makes mediclaim premium a tax benefit that enables you to protect wealth and health.
This deduction is available under section 80D. It is exclusive of the Rs. 1,00,000 limit that most people claim as deductions under section 80C.
Claim Deduction for Parents’ Mediclaim Premium
Paying the mediclaim premium for your parents is the simplest and most commonly used strategy to save tax. Buy a mediclaim policy for them and get deduction for the premium paid under Section 80 D. Up to Rs. 15, 000 a year is deductible from your taxable income if you buy a mediclaim policy for your parents. If the parents are senior citizens, the deduction is even higher at Rs. 20,000. This deduction is over and above the Rs. 15,000 that one can claim as deduction for the mediclaim premium paid for himself and his family (spouse and children). Also, this deduction is available irrespective of whether the parents are financially dependent on the tax payer or not.
Post-DTC: What Happens to Mediclaim Premium?
The tax saving potential of mediclaim premium too will shrink after the DTC comes into effect in April 2012. It has proposed to reduce the deduction for health insurance, life insurance and tuition fees for children to a combined limit of Rs. 50,000. That would be a setback for those looking for tax savings from health and life insurance.
However, it should not keep you from buying a mediclaim policy for your parents. After all, they looked after your needs when you were a child. Now it is time you repay their debt.
