Union Budget 2015: Health insurance deductions hike to cut annual tax by Rs 16,995 in top-tax bracket

NEW DELHI: Someone buying health insurance for his family and for senior citizen parents can save up to Rs 16995 in tax under Section 80D. The FM in his budget speech on Saturday announced an increase in limit of deduction of health insurance premium from Rs 15,000 per year to Rs 25,000 annually. For Sr. citizens and very Sr. citizens (above 80 years of age), this limit has been increased from the current Rs 20,000 to Rs 30,000. Meaning, if you fall in the 30% tax bracket, you can save up to Rs 16,500.

The tax cut will be lower at Rs 11,165 in the 20% tax bracket. In the lowest 10% bracket (those earning up to Rs 5 lakh), the tax cut will be limited to Rs 5,665.

Very senior citizens, who are not covered under any health plan, would also get an additional benefit of Rs 30,000 as deduction for medical treatments. The deduction limit of Rs 60,000 towards expenditure on account of specified critical diseases has also been enhanced to Rs 80,000 in case of very senior citizens.

An additional deduction of Rs 25,000 has been announced for differently-abled persons under Section 80DD and Section 80U of the Income-tax Act.

"This is being done to encourage people to take health insurance as a part of our social security programme," said FM Jaitley.