March 31st deadline: You can claim this much insurance amount to save taxes

With only two days left for March 31 deadline, most taxpayers would be busy filing their income tax returns. The department also allows a taxpayer to avail various benefits and save tax on their hard-earned income. There are many investment pools like National Pension Schemes, Fixed deposits, mutual funds, public provident fund (PPF), ULIPs and government saving schemes where investments can actually help you reduce the quantum of tax you pay. However, did you know even insurance can come as a helping hand in regards to your tax burden. 

Ankur Choudhary, Co-founder and CIO at Goalwise.com says, "Income tax deductions are not limited just to section 80C or to investment products. Even your and your parents’ health insurance policy premiums are eligible for income tax deductions.  Here’s how Section 80D of the Income Tax Act provides for deductions for health insurance policy purchases as follows, as per Choudhary.

a) Deduction of upto Rs 25,000 for health insurance for yourself, spouse and children

b) Additional deduction of Rs 25,000 for health insurance of parents below 60 years of age, or Rs 50,000 for parents above 60 years of age

For example, if you are below 60 years of age and your parents are above 60 years of age then you can claim upto Rs 75,000 paid for health insurance premium for that financial year. If you are in the 20% tax bracket, this implies tax savings of about Rs 15,000 and if you are in the highest tax bracket of 30% then your tax savings would be Rs 22,500!

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Also, remember that this Rs 75,000 deduction under section 80D would be in addition to the Rs 1.5 lakh exemption provided under section 80C. 

However, Choudhary says, “Note that in order to claim the tax benefit for FY 2018-19, you need to have paid the premium in the same financial year i.e. before 31st March 2019 if you have not already done so."