Your Mom and Dad can cut Tax too

Posted on : Monday, December 30, 2013

Buy health Insurance policy for your parents and save taxes

We fulfill the responsibility of keeping our kids and wife healthy by buying them a health insurance policy! But why are parents being left out from that protective umbrella? Read ahead to find out how buying your parents a health insurance policy will not just keep them insured but will also help you to save taxes!

Your parents-Your savior for taxes too!!

Parents have always been a tremendous help throughout. When we were a cranky teenager, a grumpy adolescent, they have always been standing by with a help guide in hand. Now we are adults and we don’t need their help anymore, we are big enough to solve our problems! But if the problem is of tax saving; you again need them and can serve them too

You have been claiming the deduction of premium paid for the insurance policy of your own, your wife or kids u/s 80D. But do you know that you can separately claim deduction of premium paid for policy of your parents as well.

Features of section 80D

Features of section 80D relating to health premium of parents have been summarized below.

1. If you buy a health insurance policy for your parents, then the premium you pay on their policy is deductible u/s 80D.
2. The amount of deduction available is the amount of premium paid during the year or Rs.15,000 whichever is lower.
3. Moreover even if one of your parents is of age 60 years or above then the limit of Rs. 15,000 will increase to Rs. 20,000.

For e.g. Mr. Y pays premium of Rs. 25,000/- during the year for health insurance policy of his kids and wife. Neither his wife nor his kids are 60 years or above. He also pays Rs. Rs. 30,000 as premium for health insurance policy of his parents. His mother is 58years old and father is 62 years old.

Now as per section 80 D he will be allowed a total deduction of Rs. 35,000.

1. Rs. 15,000 as premium paid for his kids and wife, (since none of them is 60 years or above therefore the cap will be Rs. 15,000).
2. And additional Rs. 20,000 for premium paid for his parents (since his father is 62 years old therefore the cap will be Rs. 20,000).

Mytaxcafe suggests: Health insurance policy is useful in two ways; firstly it keeps your parent’s health insured, secondly it is helping you to save taxes. Thus this investment should not be missed. And if you have already bought one policy for your parents then don’t miss to claim deduction.