Bangalore: Having a medical insurance and spending money on the premiums will save you tax. Want to know how? Under section 80D and 80DD, 80DDB of Income Tax Act of 1961, the medical expenses of a family, like health insurance premium or family member’s disability or critical illness related expenses are tax-free. Section 80D states how your medical insurance premiums are exempted from tax.

The foremost condition for the medical insurance premium to be tax-free is that the premium must be paid from an income which is tax chargeable and not from any other source or from a gift provided by someone else. But sharing the premium to be paid, with your spouse or parents is fine.

The individuals ageing less than 65 who pays 15,000 or lesser as a medical insurance premium; and the senior citizens above 65 years who pays 20,000 or lesser as a medical insurance premium are liable for tax- deduction.

One can claim a deduction of 15,000 by buying health insurance policies for parents. This amount can be 20,000 in case of parents ageing more than 65 irrespective of the fact whether parents are dependent on the individual or not. This claim can be done also for self, spouse, children and parents but this cannot be claimed for in-laws.

The insurance premium must be paid by any other mode other than cash, such as cheque, DD, credit card, debit card etc. as paying through cash allow tax benefits. The main reason for this clause is that there remains a authentication of the amount paid through this way and that it is not from any illegal source the premium is paid.  Thus having a medical insurance premium not only covers the wellbeing but also takes care of one’s family and it is a financial boon too, which quietly saves your fiscal flow from your account.