What is the Tax benefit on Health Insurance Policy?
Health Insurance policy gives many advantages, in which Tax Benefit is the one which you can avail. Along with the insurance coverage, you can also get the Tax Benefit for your Health Insurance Policy. The deduction on payment of Health Insurance Premium is available under Section 80D of Income Tax Act, 1961. The deduction is made from Gross Total Income. Gross total income includes income from all heads.
Total Taxable Income = Gross total income – Deductions
Section 80D (Medical Insurance Tax Benefit)
- Under Section 80D, you can get tax deductions for Health/Medical Insurance premiums for self, spouse & children.
- Payment is not allowed for cash mode. (Payment regarding preventive health check-up can be made by any mode including cash mode)
- It is applicable to only Individual (resident/non-resident) and HUF (resident/non-resident).
- Payment should be made out of income chargeable to tax
Maximum Amount Deductible under Sec 80D:
- The Deduction is raised from Rs. 15,000 to Rs. 25,000 from the AY 2016-17.
- As per Assessment Year 2016-17, the deduction for senior citizens is Rs. 30,000.
- For uninsured super senior citizens (more than 80 years) medical expenses incurred up to Rs. 30,000 shall be allowed as a deduction under Sec 80D.
- Total deduction for medical expenses and health insurance premium for parents shall be limited to Rs. 30,000.
Section 80DD: Deduction is allowed up to Rs. 50,000 (Rs. 75,000 for next Assessment Year) for individual /HUF and resident of India for the expense incurred in a medical treatment of handicapped dependent (who is the person with a disability). For severe disability deduction is allowed up to Rs. 75,000 (Rs. 1,25,000 for next AY).
Section 80DDB: Deduction is allowed up to Rs. 40,000 (Rs. 60,000 for Senior Citizens) for individual/HUF and Indian resident for the expenses incurred in a medical treatment of diseases and ailments that are specified.
Under Section 80U, the tax deduction is allowed in case of a person with the disability (who is certified by the medical authority in the PY (previous year)).
- Multiple disabilities include Autism, cerebral palsy etc.
- Only individuals can avail this tax deduction u/s 80U.
- A resident individual with a disability of 40% or more can claim for Rs. 50,000/- (Rs. 75,000 for next Assessment year).
- A resident individual with a disability of 80% or more can claim for Rs. 1,00,000/- (Rs. 1,25,000 for next Assessment year).
What are the Tax Benefits on a Group Medical / accident Insurance Premium paid by the employer for the life insurance of the employee?
This case comes under the Perquisite under Section 17(2). The brief about perquisites is as follows.
Perquisite is defined as a benefit attached to an office or position in addition to salary or wages.
- The Medical facility provided in a hospital owned or maintained by an employer is not taxable.
- The Medical facility provided by an employer in any govt hospital or approved hospital or private hospital (recommended by Govt Hospital) is not Taxable.
- Medical insurance premium paid by an employer is not taxable.
- Any other expenditure incurred or reimbursed by an employer for providing the medical facility in India is not chargeable to tax up to 15,000/-.