An assessee is entitled to certain deductions from his taxable income under Chapter VI A of the Income Tax Act. One of the deductions is in respect of medical insurance premia. This is provided under Section 80 D of the Act.
This deduction is available to all assessees. Assessees may be resident or even non-resident. The deduction is available in respect of sums paid by him by cheque in the previous year (read Financial Year), out of his income chargeable to tax.
Thus, strictly speaking payments made by cash would not be allowed. Payments made prior to the starting of the year or after the end of the year would not be allowed as a deduction.
The deduction is restricted to the income chargeable to tax and hence if there is no income chargeable to tax, then the question of any deduction does not arise.
The deduction is available in respect of a sum paid, subject to a limit of Rs 10,000. This payment has to be made, to effect or to keep in force, an insurance on the health of the assessee, his/her spouse, dependent parents and children.
In case of an HUF who is an assessee, it would include the members of the family. In case of a senior citizen, the limit shall be Rs 15,000 (as against Rs 10,000) or actual whichever is lower.
Please note that in case of individuals, the sums paid in respect of dependent parents and dependent children would be allowed as a deduction and not in respect of parents and children who are not dependent.
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