Top 5 Tax Deductions on Insurance Under Section 80C & 80D

Tax planning isn’t a March activity. Yet most people wait until the last minute to think about investments and end up scrambling for proof. The smarter way? Start early in the year, so your money works for you, not just for saving tax.

While the clock is ticking, saving tax doesn't have to be difficult. The good news? Your insurance policies will be doing most of the heavy lifting for you. Know it or not, but from life insurance premiums to health coverage, Sections 80C and 80D of the Income Tax Act can help you save a lot. The tax deduction insurance is indeed your shortcut to saving money. 

Let’s understand the various tax-saving sections that you can take advantage of, but in the Old Tax Regime. The New Tax Regime doesn’t provide any such tax deductions.

What is Section 80C of the Income Tax Act?

Section 80C of the Income Tax Act 1961 offers tax deduction perks to taxpayers as it reduces the gross total income. Not only does this lower their taxable income, but it also lowers their total tax liability. According to this Section, investments made via Life Insurance, PPF, EPF, Sukhanya Samridhi Yojana, FD in Bank, Post Office Deposit, Home Loan Principal Amount and others are eligible for specific schemes. If you're using this scheme, you can avail yourself of the benefits of tax savings. 

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act provides tax deduction benefits to HUFs and individuals for up to ₹25,000 in the premiums paid for health insurance for that financial year, which goes upto ₹50,000 if you or your dependent spouse is a senior citizen. 

Additionally, senior-citizen parents are covered in the insurance for an additional amount of ₹50,000 per financial year. Therefore, as the taxpayer, you will be eligible to claim deductions of ₹1 lakh under Section 80D. 

5 Major Tax Deduction Insurance Under Section 80C and 80D

During tax season, you don't need to break a sweat over tax savings. Here are some of the top tax deduction insurance that can help to lower your taxable income. Some of the significant expenses qualifying for deductions under Section 80C and 80D include the following:

  1. Life Insurance: The premium you pay for your life insurance policy qualifies for deductions under Section 80C. It is applicable for all types of life insurance policies, including endowment plans, Unit Linked Insurance Plans (ULIPs) and guaranteed income plans. So, when you get a life insurance policy, you're saving yourself from paying a lot. It comes with a limit of ₹1.5 lakh per year under the Old Tax Regime.
     
  2. Pension Funds: If you've signed up with any life insurance company for pension plans, you can claim the deduction under Section 80CCC of the Income Tax Act, 1961. Therefore, you get the benefit of retirement savings, along with tax deductions. This is within the ambit of ₹1.5 lakh per year of 80C deductions under the Old Tax Regime.
     
  3. Health Insurance: You can now claim premiums paid for health insurance under Section 80D. The claimable amount is up to ₹25,000 for children, spouse, and self, which goes upto ₹50,000 if either you or your spouse is more than 60 years of age.

    Additionally, if your parents are covered too, an additional ₹25,000 can be claimed if they are less than 60 years of age, and if they are senior citizens, the amount is increased to ₹50,000.
     
  4. Preventive Health Checkup: You can claim up to ₹5,000 tax deduction per year for preventive health check-ups for yourself, your spouse, parents, or children according to Section 80D. 

    This will be applicable within the overall limit of ₹25,000 to ₹50,000, based on the limit of 80D. The good news is that cash and other modes of payment are accepted for a preventive health checkup. 
     
  5. Top-up Plans or Critical Illness Riders: If you have a critical illness or top-up rider on your insurance plan, you may file for claims. This is valid under the total limit of Section 80D. These are applicable for standalone health riders, top-ups, and critical illness policies. If your employer-provided policy coverage isn't enough, this proves to be extra useful. 

Who Can File a Claim for Tax Deduction Insurance Under Sections 80C and 80D?

Before you file a claim for tax deduction insurance, you need to check eligibility as well. Indian residents and Hindu Undivided Families (HUFs) are eligible to allow for tax deductions under Section 80C and Section 80D of the Income Tax Act of 1961. 

Points to Remember for Tax Deductions Under Sections 80C and 80D

Here are some of the key things you must remember for insurance tax deductions under Sections 80C and 80D:

  • Always keep a record of insurance policy and payment receipts. 
  • You will have to add these premium payment documents under the Deductions section, along with other documents as required.
  • The Section 80C tax deduction benefits will be applicable if the overall premium paid is within 10% of the insured sum. 
     

Wrapping Up!

Author Bio

Paybima Team

Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 21 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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