Senior citizens to get tax saving of up to Rs 15,600 due to higher mediclaim deduction
The Union Budget 2018 has proposed to increase this deduction for senior citizens from up to Rs 30,000 to a maximum of Rs 50,000.Updated: Feb 02, 2018 01:13 IST
The Union Budget has many proposals that would cheer up the senior citizens. And, one of the biggest of these reasons is the increase in deduction limit under section 80D of the income-tax Act—under which one can avail benefits for payment of health insurance premiums.
The premiums that you pay towards a health insurance policy qualify for tax deduction. The Union Budget 2018 has proposed to increase this deduction for senior citizens from up to Rs 30,000 to a maximum of Rs 50,000. This change would be applicable for the financial year 2019. For someone in the highest tax bracket of the tax savings would be up to Rs 15,600, compared to Rs 9,270 now.
“On an average, senior citizens pay around Rs 10,000 as premiums but the health insurance cover is insufficient given the rising healthcare costs and their increased medical attention. Increasing the deduction limit in that sense will encourage senior citizens to buy a higher health insurance policy, which is the need of the hour,” said KG Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance Co. Ltd.
For individuals who are below 60 years of age, no change has been proposed. The deduction under section 80D, for them, continues to be Rs 25,000. “Ideally, for the general segment too we were expecting a hike in the deduction limit that is aligned to medical inflation. An ideal insurance cover for a family of four in a metro is about Rs 15 lakh and the premium a 45-year-old will need to pay is definitely more than Rs 25,000,” said Sandeep Patel, chief executive officer, Cigna TTK Health Insurance Co. Ltd. But you can benefit if you have senior citizen parents and you pay premiums on their behalf. Under section 80D you can claim a deduction for health insurance bought for self, spouse and children. In addition to this, you can claim a further deduction for policies bought in the name of parents.
So if the parents are below 60 years of age, the total deduction available to you is Rs 50,000. The budget 2018 makes no changes here. But if your parents are senior citizens, above 60 years, you can claim an additional deduction of up to Rs 50,000—taking the total deduction to Rs 75,000. This deduction limit includes the preventive health check-up limit of Rs 5,000. Senior citizens can now claim a deduction of Rs 50,000 towards medical expenditure, instead of claiming the benefits of paying health insurance premiums. The Union Budget has also increased the limit of deduction for medical expenditure for self, spouse, dependant parents, children and siblings.