Is medical health insurance declare quantity taxable?

NEW DELHI: Radhika Agarwal, 50, was identified with a essential sickness final 12 months, and happily was lined underneath a essential sickness insurance coverage coverage. Hence, she obtained the declare quantity as per the medical health insurance coverage. But now she is questioning whether or not the quantity she obtained is topic to tax

Archit Gupta, Founder and CEO, Clear, stated, “Money obtained by way of a declare underneath a medical coverage is simply the reimbursement of bills already incurred by the insured. The medical health insurance firm doesn’t credit score any quantity in extra of expenditure incurred in direction of hospitalisation and medical remedy. As such a transaction doesn’t quantity to revenue or revenue for the insured particular person, the cash obtained within the checking account is therefore not taxable.”

Concurring, Aarti Raote, accomplice, Deloitte India, stated presently there’s a no provision within the Income Tax Act concerning taxation of medical health insurance quantities obtained by a person as declare settlement. “Insurance companies provide a cashless option to the insured individuals where the hospitalisation expenses are settled directly by the insurance company. Alternatively, suppose the cashless option does not work, in that case, the amount is reimbursed to the insured individual against a claim supported by proof of expenses incurred, including the prescription, hospital invoices, receipts, etc. Thus one may view this as an obligation of the insurance company in the first place, which needs to be paid by it on account of the premiums paid by the individual. These are nothing but reimbursement of personal expenses. There is no benefit derived or income earned by the insured person but a mere reimbursement of the medical costs incurred. Hence the prevalent view is that these should not be treated as taxable in the hands of individual,” Raote stated.

Also, quantity paid as medical health insurance premium is allowed for deduction underneath part 80D of the Income Tax Act, offered fee is made by any mode different can money.

“In case of a person, ₹25,000 for himself and his household. The restrict is Rs50,000 if she is a senior citizen (age greater than 60 years). An extra deduction for insurance coverage of both of the mother and father is accessible to the extent of Rs25,000 if age lower than 60 years and Rs50,000 if mother and father are senior residents. For uninsured senior residents, medical expenditure incurred as much as Rs50,000 shall be allowed. A deduction of ₹5000 might be allowed underneath this part for fee of preventive well being check-ups. This deduction is included within the above deduction,” stated Gupta.

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