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Priyesh Pandey
by on March 28, 2018
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Health insurance is a must have for all, especially owing to rising medical costs. When you purchase a health insurance cover, the premium you pay can be deducted from your annual health insurance. While this tax deduction can be claimed by the insurer in an individual health insurance, this is not the case when it comes to a group health insurance policy. This is because in a group policy, only an employer can make a claim on the premium paid as a tax deduction. This means that under this health cover, the employee is only eligible for medical benefits and facilities and is not permitted to avail IT exemption. Under the IT Act, an employee cannot claim tax exemption, if the premium amount is paid for by the employer. Main Elements of the Income Tax Regulation According to the Income Tax Act, the contribution made by an employee for a group insurance policy can be considered as a deduction. The reason why a group insurance policy for employees is exempted under income tax is because a major chunk of this insurance is paid only after an employee’s death. To be eligible for these group health policy benefits, the employee needs to be currently employed in an organization or firm. The Tax Benefit under Group Insurance Policies Take for instance, an employee is working in a startup firm and is signed up for a group Mediclaim policy for employees.The startup offers a policy that requires sharing of the group health premium equally. When filling ITR, however, the employee cannot presume that the premium payment shown in the salary slip is applicable for a tax deduction. This amount cannot be included in eligible deductions or table amount. This is because only the employer of the startup can avail a deduction. Claim a deduction under Section 80D of the Income Tax Act on either the family floater plan or individual plan. There is an option to claim a deduction on the health insurance policy’s premium paid for parents, provided the employee has signed up for it. Few Points to Remember
    • Only when the premiums of the policy are bought separately and are paid on your own, you are eligible for deductions.
      The allowances and reimbursements paid as part of the salary are tax-exempt, but only until a specific limit. They are also subject to certain factors.
      Although this policy ensures that every single employee benefits from it, the premium and benefits offered are customized, based on the employer’s request.
      Maturity proceeds are free of taxes for employee’s family.
  • These are just a few points to remember, when it comes to group health insurance. Any group Mediclaim policy premium reimbursed or paid by the employer is not liable to tax. But, an employee should not invest in a policy only to save on taxes. Medical inflation and increasing hospital bills have made purchasing a policy a prerequisite. It is a good idea to avail the benefits of a group insurance policy and also go in for individual covers to secure your parents and family.
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