Medical Insurance Premium (i.e. Mediclaim Insurance) is paid by an Individual either on his/her own health or on the health of spouse, parents and dependent children. Mediclaim policy is taken to cover medical expenses spent on the treatment.
For the deduction towards payment of Mdeiclaim Insurance, the conditions mentioned in Section 80D of Income Tax Act.
In some companies, an Employer pays the premium & in turn deducts from the Salary of a person (employee) for whom he contributed.
Now the question is, Whether the Mediclaim Insurance paid by way of Deduction from Salary is allowed as Deduction?
“The premium may be paid by any mode of payment other than cash” means it should not be paid by cash.
Since the premium is not paid by Cash, it is allowed as a deduction under Section 80D of Income Tax Act, subject to limit mentioned therein. And the same is allowed as a deduction and shown in Form 16, issued by an Employer.
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Some of the other points to be looked into are :
- Premium should not be paid in cash.
- The premium must be paid out of Taxable Income only. (Paid out of Exempt income is not deductible)
- Premium paid for Multi-Year policy (i.e. one-time payment) is allowed as a deduction in the same year in which year it is paid. There is a proposal in the budget to allow the deduction on a proportionate basis.
- Overseas mediclaim may be eligible for the deduction if it satisfies the conditions mentioned in Section 80D.
- Amount paid in Cash on Preventive Health check-up is allowed for deduction. This is the only cash payment is allowed as deduction.
