Senior citizens can save tax with medical bills as per section 80D of the Income Tax Act,1961. The term senior citizen includes people who are 60 years or above in age. Thus, any medical treatment availed, or premium paid under medical insurance for senior citizens makes them eligible for claiming tax benefits u/s 80 D.
What is the Limit for Senior Citizens tax deduction?
The Income Tax Act permits you to seek a total exemption of Rs 50,000 (as of FY 2021-22) for medical costs spent in a fiscal year for the healthcare of senior persons (qualified parents). As a result, if you are 60 or older, you can receive a total tax exemption of Rs 50,000 on the healthcare bills or premiums for medical insurance for senior citizens.
The following are the types of tax deductions allowed under the act for payment against medical insurance:
- If the senior citizen pays for the premium itself, the maximum tax deduction under section 80 D would be Rs.50,000
- If the premium is paid by a person less than 60 years of age, whose parents are senior citizens then the total exemption under section 80 D will be maximum of Rs. 75,000 (25,000 for the individual and the rest 50,000 for senior citizens).
- If there is a situation where the premium is paid by senior citizens and the parents are also senior citizens, then the tax deducted can be maximum 1,00,000 (50,000 for the individual and 50,000 for parents).
What kind of expenses are Eligible for deduction of Tax?
Any sickness or health care expenditures not listed in the Income Tax Act are not eligible for a tax deduction under section 80D. Costs for doctor’s visits, drugs, hospitalizations, and medical equipment such as pacemakers, assistive devices, and so on, on the other hand, would be eligible for exemptions under the government’s revisions to the Act.
Section 80DDB also covers specific medical problems and illnesses in addition to Section 80D. AIDS, cancer, Parkinson’s disease, and other disorders fall within this category. While people who are not senior citizens can claim up up to Rs 40,000 in tax deductions, senior persons can claim up to Rs 1,00,000 in tax deductions under this clause. If the health issue for which you are paying bills falls into this group, you can make a claim under Section 80DDB.
If your health problem does not fit under Section 80DDB or the maximum is reached, you can recover the leftover healthcare expenditures under Section 80D.
How can the tax deductions be availed by payment of premium?
Use online payment methods to pay your medical insurance premiums or the medical care expenses to claim tax benefits. Use a debit card, credit card, net banking, cheque payment, or other method of payment rather than cash. You can also pay your healthcare expenditures or premium money using other electronic payment options such as UPI, mobile wallets, and so on.
You can, however, pay for preventative health screenings in cash. Preventive health checks should be performed on a regular basis to prevent yourself from illness or disease. When a sickness or medical problem is detected in a timely manner, the appropriate remedy may be obtained.
What are the documents needed to claim the tax benefit?
The Income Tax Act does not establish a list of papers necessary to claim Section 80D tax advantages. However, it is prudent to keep documented proof such as healthcare spending bills, medicine invoices, medical laboratory results, health records, doctor’s prescriptions, and so on in event you need them for verification purposes.
Section 80D allows you to claim tax deductions of up to Rs 50,000 for preventative health check-ups, health insurance policy premiums, health costs for you and your families, and the Central Government Health Scheme (CGHS) if you are a senior citizen. The highest tax deduction limit for preventative health check-ups, however, is Rs 5000 each fiscal year. This amount for preventative health check-ups is part of the total tax exemption limit for older persons which is Rs 50,000
So, don’t forget to include your hospital bills whenever you submit your tax returns for the next fiscal year or when you submit your documentation at the end of the current fiscal year. If you are a senior citizen or even have ageing parents for whom you pay insurance premiums or medical bills, you can deduct those costs as well. A senior citizen health policy has a lot more benefits including affordable premiums and wide coverage to name a few.