Health insurance policies have become the need of the hour, especially in view of the rise in lifestyle diseases. These policies, which help meet any planned or unforeseen expenditure on hospitalization and medicines, have tax benefits as well.
As per section 80D of the income tax (I-T) act, you can avail deductions on payments of up to ₹50,000 for premium on policies for senior citizens and ₹25,000 for others in your family in a year.
Yet, there are some scenarios where you can still lose the tax deduction benefits even after following all the I-T rules. No cash payments: Policyholders can claim a tax deduction on their health insurance policies only if they pay premiums through a mode other than cash. “When buying a policy, you should pay the premium either by cheque, or funds transferred via NEFT, IMPS or UPI.
You need to use a banking route, whether offline or online, to be eligible to receive tax benefits," said Anup Bansal, chief business officer of Scripbox.