Friday, June 24, 2016

Tax Benefit of Buying Health Insurance in India for NRI - Section 80D

There is no doubt that in today's expensive world you need a good health insurance policy for your family and parents. Hospitalization and the Medical cost have risen significantly in India and expenditure ranging in 5 lakhs to 10 lakhs is nothing for a major critical illness like Cancer and Heart-related disease. It's simply not possible to arrange huge amount, ranging from 5 to 50 lakhs for hospitalization and medicines at the time of need, it's both difficult and troublesome, that's why buying a health insurance is a must for a family guy.  Indian government allows both residents and NRIs to claim tax rebate under section 80D for health care expenses for its spouse, children and parents. Particularly for NRI, where parents are living in India, they should buy adequate health insurance policy.

On the same note, I also suggest buying travel insurance for your parents whenever they go overseas for a social visit. It's even more important than buying health insurance in India because of the huge cost of medication and hospitalization on western countries e.g. USA, Europe, UK, and even Asian metro cities e.g. Sydney, Tokyo, Hong Kong or Singapore. I'll write a separate blog post about that to explain in detail, though.

Tax Benefit of Buying Health Insurance

Suppose if you buy a health insurance policy you can save tax under various section of the Income Tax Act. These include Sec 80C, Sec 80D, Sec 80E etc. Investments made on medical insurance premium paid are eligible for tax deduction, from your earnings, under section 80D of income tax law.

How much can you save with a health insurance policy? As per Section 80D the premium amount paid is deductible up to Rs. 25,000 from the income per year. In the case of 60 years and above the deductible limit increases up to Rs. 30,000 per year.

In the case of parents, if you are paying their medical insurance premium then there could be an additional deduction of Rs. 25,000 per year. This amount paid can be claimed for under section 80D. If parents are a senior citizen, then the additional amount deductible can be of Rs 30,000.

So, above all, every individual is viable to deduct up to Rs. 55,000 from the taxable income as per the medical insurance premiums paid for self, spouse, children (Rs.35000) and parents (If senior citizen Rs.30000/- else Rs.25000/-). Though you should remember that you cannot claim premiums paid for your brother, sister, or you in-laws.

Here is a nice summary of how much you can save from income tax by buying health insurance in India in tabular format:

Tax Benefit of Buying Health Insurance in India for NRI - Section 80D

You should also remember that you should not pay premium from savings or gifts received. The insurance premium has to be paid from the taxable income of that year if you plan to make a claim deduction in section 80D.

That's all about Tax benefit of buying health insurance in India. Thanks to Government for encouraging citizens on buying health insurance because it will not put them on financial pressure when they have to focus on taking care of the patient.

1 comment:

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