Can only proposer get IT benefit on mediclaim policy?

My daughter took a mediclaim policy for me and my wife around 14 years back, and has been regularly paying premium for this policy. I am a more than 70 years old and a retired government employee, while my wife is above 65. My daughter finds it difficult to pay a large sum as premium as she is now unemployed. However, I wish to continue the policy. I would like to know whether I can pay the premium amount for this policy, which covers me and my wife and claim the income tax benefits available under Section 80C?

—Jeyaseelan Devadoss

Medical Insurance premium can be claimed as a deduction under Section 80D and not 80C. The tax benefit under Section 80D is over and above the 1.5 lakh deductions available under Section 80C.

The new tax regime is the default tax regime for FY 2023-24 onwards and deductions under Chapter VI A i.e. 80C, 80D, etc. will not be available under the new tax regime. If you opt for old tax regime then, you can claim deductions under Chapter VI A of the Income Tax Act. Section 80D of the Income Tax Act lays down that the deduction for medical insurance premium can be claimed by an individual who pays the premium for self, spouse, dependent children, parents. There is no mention of proposer or policy owner in the Act. It only mentions that if you “pay the premium” for a policy for self, spouse, dependent children, parents you can claim the deduction.

The maximum deduction available for self, spouse and dependent children is 25,000. The limit increases to 50,000 in case of senior citizens. Similarly, if you are paying medical insurance premium for parents’ policy, you can claim an additional benefit of 25,000 for parent’s medical insurance policy. In case parents are senior citizens, then the limit increases to 50,000. To qualify for the deduction, the premium must be paid through a non-cash method. Further, you can also claim a tax deduction of 5,000 per annum on preventive healthcare for your family.

Here, you are paying the medical insurance premium for yourself and spouse’s policy and you are a senior citizen. Thus, you will be able to claim the deduction of maximum 50,000 for this policy.

Nitesh Buddhadev is a Mumbai-based chartered accountant.

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Updated: 13 Sep 2023, 10:35 PM IST

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