Medical Insurance Tax
If senior citizen parents are also insured, tax can be cut by up to Rs 6,180. While enhanced deduction will certainly help cut tax, it will benefit only those who spend on health insurance.
It will be especially useful for senior citizens and people with health conditions who pay higher premiums. For instance, even a healthy 60-year-old couple has to shell out around Rs 30,000-Rs 35,000 for a Rs 5 lakh cover.
However, younger buyers may not benefit so much. “These deductions will be beneficial for older individuals who are in their late-30s and buy a Rs 5 lakh-plus family floater cover that includes their senior citizen parents. These people usually pay an annual premium of around Rs 45,000-Rs 50,000.
Earlier, these people would lose tax benefits on around Rs 15,000 which can now be claimed,” says Sudhir Sarnobat, CEO, , a health insurance consultancy firm. However, the finance minister also announced an increase in service tax rate from 12.36% to 14%. This means health insurance premiums will go up next year. While deduction benefit is for those who pay higher premium, a higher service tax is for everybody.
As a welfare measure, Arun Jaitley also announced a Rs 30,000 deduction for medical treatment of very senior citizens (above 80 years) who are not covered under any health plan. “It is a relief as they now claim deductions for actual expenses without being dependent on a health insurer,” says Sudhir Kaushik, co-founder and CFO, Taxspanner. The deduction limit towards expenditure on specified critical diseases such as AIDS and cancer has also been enhanced from Rs 60,000 to Rs 80,000 for this category. Another additional deduction of Rs 25,000 has been announced for differently-abled persons under Sec 80DD and 80U.
Medical Insurance Tax
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