Health insurance premiums qualify for tax deductions under Section 80D of the Income Tax Act. While for individuals below 60 years of age the maximum deduction allowed is Rs.25, 000, the limit has been enhanced for senior citizens. According to the new rules mentioned in the Union Budget 2018, senior citizens can claim a maximum deduction of Rs.50, 000 on the premiums paid for their health insurance policy. In fact, even if an individual, who is not a senior citizen, pays the health insurance premium for senior citizen parents, he or she can claim a tax deduction of up to Rs.50, 000 on the health insurance premium paid.
Thus, for tax-payers, the increase in the 80D limit is good news and it makes health insurance more popular. Tax-payers can claim a maximum deduction of Rs.1 lakh on two different health insurance policies. The first one for health insurance premiums paid for themselves (if they are senior citizens) and the second one for the health insurance premium paid for their senior citizen parents.
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