How to use Section80D to save maximum tax?


save tax under section80D

We are allowed to claim a deduction of Rs.25K from our taxable salary for the Mediclaim Insurance premium. But so many of you will be covering yourself (including spouse and kids) within Rs.10K to 15K only. You can utilize the balance benefit by purchasing an Outpatient benefit Insurance policy.
For example, let’s say your Mediclaim premium is Rs.9000. (This is the normal premium you pay for 5 lacs cover for self-+spouse+2kids.

You can now buy additional Outpatient expenses insurance policy for Rs.16K. This gives you additional two benefits

1) Outpatient expenses benefit from Rs.25K.
2) 30% tax saving on Rs.16K additional premium. (assuming you fall in 30% tax bracket)

Hence the total benefit by paying Rs. An additional 16K premium is Rs.30500.

Apart from this amount, if you have purchased a Mediclaim policy for your senior citizen parents, then the amount towards the premium can also be exempted upto an additional limit of Rs.50000. So the maximum benefit under section 80D can be extended upto Rs. 75000 in this case if your parents are aged over 60 years.

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Susheel Agarwal

Susheel is the CEO of Ethika Insurance Broking P Ltd. This company, which has a current value of 10 million dollars, was bootstrapped by him and two of his friends. He attributes his success to his ability to inspire others to seek happiness at work.