Tax Stimulus for Medical Insurance
An Individual Is Allowed Additional Deduction
If He Pays Premium For His Parents
Medical Insurance has becoming increasingly popular in India with the increasing cost of medical treatment and hospitalization expenses. The benefit of having a medical insurance is that by making a small payment of insurance premium, the proposer can cover the cost of medical treatment and hospitalization of himself and his family members in case of need.
Section 80D of the Income-tax Act provides for deduction out of the Gross Total Income of the taxpayer in respect of such medical insurance premium paid. The popular medical insurance policy offered by the General Insurance Corporation of India is the ‘Mediclaim Policy.’ Several private insurance companies recognized by the Insurance Regulatory & Development Authority (IRDA) also offer a variety of medical insurance products, the premium payment of which is eligible for deduction under Section 80D.
Minus Social Security : EET=Inequity
Hard Hit Small Salaried Deserve Lower Starting Tax Rates!
Both Employment & Retirement Made More Taxing!
- Allowances & Perks – no longer exempt: House rent allowance (HRA), leave travel concession (LTC), medical reimbursement, value of free or concessional medical treatment and children’s education & hostel allowance.
- Puny deductions that will still continue: Professional tax paid, transport allowance to the extent prescribed and prescribed special allowances to meet expenses incurred for official duties.
- Retirement may not be as relaxing: Leave encashment on retirement, to be fully taxable.
- VRS compensation, death or retirement gratuity and commutation of pension to be exempt, only if deposited in a Retirement Benefit Account (RBA).
- However, any amount drawn from RBA (including PF contributions and accretions after 1st April, 2011) under any circumstances to be treated as taxable in the year withdrawal. (more…)
Roti, Kapda but No Makaan!
Analyzing Tax Gain & Pain In The New EET Regime
- Tax Incentives for Housing Scrapped: Current deductions in respect of interest & repayment of housing loan abolished under the new Code.
- Higher Deduction For Savings & Children’s Education: Individual & HUF entitled to an aggregate deduction of upto Rs.3 lakhs in respect of permitted savings & children’s tuition fees payment, as compared to current ceiling of Rs.1 lakh.
- Accretions Exempt but Withdrawal Taxable: No tax on accretions to the permitted savings. However, any withdrawal from permitted savings to be taxed.
- Tax Shelter for Old PF/PPF Accumulations: Future withdrawals out of accumulated balance of PF & PPF as on 31stMarch, 2011 to enjoy special exemption. (more…)