Common Mistakes to Avoid While Claiming the Health Insurance Deduction

Health insurance is one of the most crucial investments a person can make. It ensures that you can recover from any medical emergency that may arise without having to worry about the financial burden. In India, the government has made healthcare insurance policies more affordable by offering a tax deduction on the premium amount. This tax deduction can be claimed under Section 80D of the ITA (Income Tax Act).

 

However, claiming the medical insurance tax deduction is not always a straightforward process, and there are several common mistakes that people make while filing their tax returns. To make sure that you get the maximum benefit from the deduction, this blog will discuss the benefits of health claim deductions and six common mistakes to avoid while claiming a health insurance deduction.

 

Benefits of Tax Deductions for Policyholders

Medical insurance tax deduction helps policyholders to save on taxes by reducing their taxable income. It can be beneficial for policyholders as it allows them to retain more of their income. Other tax benefits on insurance are given below:

• Improved Retirement Planning: They can help policyholders plan for their retirement more effectively by allowing them to save more money for their retirement.
• Increased Financial Security: They allow policyholders to increase their financial security by allowing them to save more money. This can help them to have a more secure financial future.

 

Six Common Mistakes While Claiming Tax Benefit on Insurance

In order to get the maximum advantage from your health insurance policy and tax deductions, you should avoid making these mistakes:

 

Not Including the Entire Premium Amount

Many people forget to include the entire premium amount while claiming the deduction. This is because they are only aware of the deduction available on the base premium, which may not include other charges such as handling charges and administrative charges. To ensure that you get the full benefit of the deduction, always remember to include all the components of the insurance premium while filing your return.

 

Not Submitting the Proof of Payment

To claim the healthcare insurance deduction, it is mandatory to submit proof of payment. This can be either a copy of the receipt or a copy of the canceled cheque. Without proof of payment, the claim will not be accepted by the Income Tax Department.

 

Not Claiming for Pre-Existing Diseases

Most medical insurance policies provide coverage for pre-existing medical conditions. However, many people forget to include these expenses while claiming the deduction. To get the full benefit of the deduction, always remember to include the expenses related to pre-existing medical conditions.

 

Not Claiming for Dependents

Many people forget to include the expenses incurred on the insurance policies of their dependents while claiming the deduction. This is because they are only aware of the deduction available on their own policy. To ensure the maximum benefit from the deduction, always remember to include the expenses related to the healthcare insurance policies of your dependents.

 

Claiming for Exempted Policies

Certain health policies are exempted from taxation under Section 80D of the ITA. These policies include those issued by the Central Government, the State Government, and the Life Insurance Corporation of India. While claiming the deduction, always remember to exclude these policies as they are not eligible for the deduction.

 

Not Claiming for Senior Citizens

Senior citizens are eligible for a higher deduction under Section 80D. However, many people forget to include this additional deduction while filing their returns. To get the maximum benefit of the deduction, always remember to include the additional deduction available for senior citizens.

 

Claiming the medical insurance tax deduction is an excellent way to save money. Not having the right documentation, not having the right coverage, and not being aware of the eligibility criteria can all be costly errors. Therefore, it is essential to be conscious of the common mistakes and take the necessary steps to ensure that the healthcare insurance deduction is claimed correctly and successfully. With the right knowledge and information, you can easily and efficiently claim the health insurance deduction and maximise your savings.