Looking at all the different ways to save money on taxes can be a bit daunting. Many of us could feel lost and confused about what options to go for. But what if we told you there is a bright side for senior citizens trying to alleviate some of their financial stress? Imagine being able to retain more of your pension by saving on medical expenses. This is where Section 80D for senior citizens comes into play. Let us check in detail how this provision of the Income Tax Act (ITA) can be our ally in effectively managing healthcare costs.
What is Section 80D?
Section 80D of the Income Tax Act of 1961 allows tax rebates of ₹25,000 for people aged under 60 and ₹50,000 for senior citizens. By senior citizens, we imply anyone of or above the age of 60 can avail of benefits under Section 80D. It acknowledges the importance of their health by offering deductions on the premiums paid for health insurance plans. In a time when healthcare has become expensive, it helps you save your hard-earned money. Taxpayers can also save ₹5,000 for preventive health check-ups; however, this amount is included in the total tax rebate one can avail.
Tax Exemption for Senior Citizens Under Section 80D
This section under the Income Tax Act allows individuals aged 60 and above to claim an 80D deduction for senior citizens on health insurance premiums. The senior citizen’s 80D limit is pegged at ₹50,000 in a financial year. As a senior citizen, one can also claim a tax rebate of ₹5,000 in a financial year, but this exemption is factored into the total amount (i.e., ₹50,000) that a person can avail of as a tax deduction.
If you are paying the premiums for your parents, who are senior citizens, you can avail of a tax rebate of ₹75,000 (i.e., ₹25,000 for yourself + ₹50,000 for your parents).
Documents Required to Claim Tax Benefits
Although the Income Tax Department does not explicitly require you to submit any documents to claim a tax rebate under Section 80D, you can keep the following handy:
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Document
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Details
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Insurance Premium Receipts
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These show you have paid for your medical insurance.
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Doctor's Notes and Bills
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Have you had to pay directly for any treatments? Those receipts are your proof.
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You must maintain all records of your medical expenses and test reports in a financial year as proof. This will also help you keep track of all expenditures related to your healthcare plan as well as other expenses incurred for your medical needs.