There is a famous saying "From the bitterness of disease man learns the sweetness of health". Investing in your health is a long term investment that bears fruit later in life.
The Government realizes this and to encourage you to take up a health plan gives you tax benefits.
You have the Section 80 D of the income tax act where you get a deduction of INR 25,000 a year on the health insurance premium you pay for a health plan for yourself and your family if you are under 60 years of age.
In case of premium for a health plan of a senior citizen (above 60 years of age) the deduction allowed shall be up to INR 30000 a year.
Income tax slabs and rates for the Union Budget 2015-16 continue to remain the same as last year.
Let us take a look at the income tax slabs for Individual Tax Payers up to the age of 60 years (Male/Female) in the Union Budget 2015-16
Annual Income (INR) |
Tax Rate |
|
0 - 2,50,000 |
Nil |
|
2,50,001-5,00,000 |
10 % |
|
5,00,001-10,00,000 |
20 % |
|
Above 10,00,000 |
30 % |
Mr Diwakar 35 years of age , married and working in an IT firm earns INR 8 Lakhs a year.
He invests INR 1 Lakh a year in an ELSS scheme and INR 1 Lakh a year in a PPF. He avails a deduction of only INR 1.5 Lakhs under Section 80 C of the income tax act even after investing INR 2 Lakhs in tax saving instruments.
Mr Diwakar has availed a family floater health plan for himself and his family and avails a deduction of INR 25000 a year on the premium he pays under Section 80 D of the income tax act.
Mr Diwakar also takes a health plan for his Dad and avails a deduction of INR 30,000 a year on the premium he pays under Section 80 D of the income tax act.
Heads |
Amount |
|
Gross taxable salary |
INR 8,00,000 |
|
Less : Investment in ELSS + Investment in PPF up to INR 1.5 Lakhs under Section 80 C |
INR 1,50,000 |
|
Less : Tax deductions under Section 80 D for a family floater health plan for spouse and family (INR 25,000) + Health insurance plan for father who is a senior citizen.(INR 30,000) |
INR 55,000 |
|
Total Taxable Income |
INR 5,95,000 |
Mr Diwakar’s income tax liability is calculated as per the income tax slabs of the Union Budget 2015-16
Heads |
% of income Tax |
Income Tax |
|
Up to INR 2,50,000 |
Nil |
Nil |
|
INR 2,50,001– INR 500,000 |
10% |
INR 25,000 (A) |
|
INR 5,00,001– INR 5,95,000 |
20% |
INR 19,000 (B) |
|
Total Tax |
|
INR 44,000 |
|
Education cess @ 3% |
3% of INR 44,000 |
INR 1,320 |
|
Net Tax Payable |
|
INR 45,320 |
Section 80 D before the Union Budget 2015-16 :
You have the Section 80 D of the income tax act where you used to get a deduction of INR 15000 a year on the health insurance premium you pay for a health plan for yourself and your family if you are under 60 years of age.
In case of premium for a health plan of a senior citizen (above 60 years of age) the amount of deduction was INR 20,000 a year.
|
Heads |
Amount |
|
Gross taxable salary |
INR 8,00,000 |
|
Less : Investment in ELSS + Investment in PPF up to INR 1.5 Lakhs under Section 80 C |
INR 1,50,000 |
|
Less : Investment in ELSS + Investment in PPF up to INR 1.5 Lakhs under Section 80 C |
INR 35,000 |
|
Total Taxable Income |
INR 6,15,000 |
Mr Diwakar’s income tax liability is calculated as per the income tax slabs of the Union Budget 2014-15 :
Heads |
% of income Tax |
Income Tax |
|
Up to INR 2,50,000 |
Nil |
Nil |
|
INR 2,50,001– INR 500,000 |
10% |
INR 25,000 (A) |
|
INR 5,00,001– INR 6,15,000 |
20% |
INR 23,000 (B) |
|
Total Tax |
3% of INR 48,000 |
INR 48,000 |
|
Education cess @ 3% |
INR 1,440 | |
|
Net Tax Payable |
INR 49,440 |
Diwakar saves INR 49,440 – INR 45,320 = INR 4,120 on paying the health insurance premiums for his family and his dad who is a senior citizen.
Investing in health insurance means you save on your medical bills as well as your taxes.
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