There are very few options to claim deduction under Income Tax Law. One important deduction which NRIs can also claim while filing their tax return in India is related to healthpremium paid for health insurance for self, spouse, dependent children and parents.
Let’s discuss this in detail.
Deductions are introduced in Income Tax Act to promote savings and investments. Deduction means an amount which when claimed can reduce taxpayer’s total income andwhich further results in reduction of total tax liability. We are discussing one such deduction which comes under section 80D.
Deduction Under section 80D:
- An individual (resident or non-resident both) can claim deduction of the amount paid in respect of health insurance or preventive health check-up of himself or family member (spouse or dependentchildren). Maximum deduction allowed is INR 25,000.
- An individual (resident or non-resident both) can claim deduction of the amount paid in respect of health insurance or preventive health check-up of Parent/Parents. Maximum deduction allowed is INR 25,000.
- If there is no health insurance and there is medical expenditure incurred for Senior citizen tax payer or any Senior citizen family member then the whole of the amount paid for medical expenditure can be claimed as deduction. Maximum deduction allowed is INR 50,000.
- If there is no health insurance and there is medical expenditure incurred on the health of a Senior citizenparent/parentsthen the whole of the amount paid on account of medical expenditurecan be claimed as a deduction. Maximum deduction allowed is INR 50,000.
- Maximum deduction available in case of parents including point 2 and 4 above cannot exceed INR 50,000.
- Maximum deduction on account of preventive health check-up (mentioned in Point 1 and 2 above) shall be INR 5,000.
Few important points:
- Family here means the spouse and dependent children of the tax payer
- Parents include Father and Mother who can be dependent or otherwise.
- Father-in-law and Mother-in-law are not included in the definition of Parents here.
- Senior citizen means an individual Resident in India who is of the age of sixty years or more at any time during the relevant previous year.
- The taxpayer here is an individual. He can be resident or non-resident or Indian citizen or foreign citizen.
- Payment should be made out of Income chargeable to tax. It means if a taxpayer hasincome in India, then only, he is eligible to claim this deduction.
- Payment should be made by any mode other than cash. However, payment on account of preventive health check-up can be made by any mode including cash.
- The aggregate payment on account of preventive health check-up of self, spouse, dependent children, father and mother cannot exceed Rs. 5000.
- In case of single premium health insurance policies having cover of more than one year, deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided.
- If an individual has opted for the new tax regime under section 115BAC, deduction under section 80D will not be available.
- Maximum deduction under this section which is possible is INR 1,00,000. It is possible when tax payer and his parents/ parent all are resident and areof age 60 years or above.
- If tax payer is not a senior citizen and his parents are resident and are of age 60 years or above then maximum deduction can be claimed is INR 75,000.
- If tax payer and his parents/parent are not senior citizens then maximum deduction allowed is INR 50,000.
- Deduction in respect of Health insurance, Preventive health check-up or Medical expenditure is allowed if expenses are incurred in India.
- Deduction will be allowed for actual amount paid or maximum limit as per the provision, whichever is low.
- If an NRI is incurring medical expenditure for the health of his parents who don’t have health insurance. And Parents are residents with age of 60 years or above then he is eligible to claim deduction in respect of medical expenditure.
Disclaimer: This article is just to make you understand about basicconcepts. Please take Professional advice in case you have any doubts.
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