Archit Gupta, Founder and CEO, Clear, stated, “Cash acquired by way of a declare beneath a medical coverage is just the reimbursement of bills already incurred by the insured. The medical insurance firm doesn’t credit score any quantity in extra of expenditure incurred in the direction of hospitalisation and medical therapy. As such a transaction doesn’t quantity to revenue or revenue for the insured individual, the cash acquired within the checking account is therefore not taxable.”

Concurring, Aarti Raote, companion, Deloitte India, stated at present there’s a no provision within the Earnings Tax Act concerning taxation of medical insurance quantities acquired by a person as declare settlement. “Insurance coverage firms present a cashless choice to the insured people the place the hospitalisation bills are settled immediately by the insurance coverage firm. Alternatively, suppose the cashless possibility doesn’t work, in that case, the quantity is reimbursed to the insured particular person towards a declare supported by proof of bills incurred, together with the prescription, hospital invoices, receipts, and many others. Thus one might view this as an obligation of the insurance coverage firm within the first place, which must be paid by it on account of the premiums paid by the person. These are nothing however reimbursement of non-public bills. There is no such thing as a profit derived or revenue earned by the insured individual however a mere reimbursement of the medical prices incurred. Therefore the prevalent view is that these shouldn’t be handled as taxable within the fingers of particular person,” Raote stated.

Additionally, quantity paid as medical insurance premium is allowed for deduction beneath part 80D of the Earnings Tax Act, supplied 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). A further deduction for insurance coverage of both of the dad and mom is obtainable to the extent of Rs25,000 if age lower than 60 years and Rs50,000 if dad and mom are senior residents. For uninsured senior residents, medical expenditure incurred as much as Rs50,000 shall be allowed. A deduction of ₹5000 shall be allowed beneath this part for fee of preventive well being check-ups. This deduction is included within the above deduction,” stated Gupta.