Can an NRI Save Tax Through Health Insurance Purchased in India?
Updated On Feb 11, 2021
When it comes to health insurance benefits, there are many. When you buy a health insurance that fits your medical needs to a tee, you not only prevent yourself from financial instability but also mental stress during an unexpected medical emergency situation. However, you also benefit by saving tax.
The tax benefit is one of the most popular advantages of health insurance. Many people have a wrong notion in mind that health insurance should be purchased to save tax. It is important to learn that health insurance is one of the prime benefits that one can avail, nonetheless health insurance should never be purchased just to save tax. Doing so can lead one to buy the wrong policy and get disappointment at the time of need.
Another important thing to understand is that tax benefit in health insurance is for all, even NRIs. Yes! NRIs or Non-Resident Indians are eligible for tax deductions. How? Let us find out.
Health Insurance for NRIs
NRIs have the permission to buy a health insurance policy in India for the health protection of themselves as well as their families. NRIs can make use of their health insurance policies to complete their treatment procedure during their stay in India. A few significant aspects that an NRI needs to keep in mind while applying for health insurance in India are terms of geographical coverage, underwriting guidelines, and more. If you are an NRI or know an NRI who is interested in buying health insurance in India, make sure you emphasize or ask them to focus on the restrictions and other conditions described in the policy. Furthermore, give weightage to the time duration before relocation.
Tax Deductions for NRIs
While NRIs can ensure that their health and the health of their loved ones are provided for, they can also benefit by claiming a deduction from the total taxable income.
According to Section 80D of the Income-tax Act, 1961, an NRI individual can claim a deduction for health insurance premiums paid in India to ensure the health of self and dependants, including the elderly in the family, i.e., parents.
Here are a few tax-saving essentials for you to note:
- If you are an NRI, you are eligible to claim a deduction of up to Rs. 25,000 for health insurance premiums. You can claim if you have covered yourself, your spouse, and dependent children and paid policy premium for the same. Keep in mind that the amount includes the expenditure of up to Rs. 5,000 on preventive health check-ups.
- Also available is an additional tax deduction of Rs. 25,000 on the premium paid for the health insurance of parents, if they belong to the age group of up to 60 years.
- If the NRI has parents above 60 years of age, then they get an additional deduction of Rs. 50,000 for the premium paid for their health insurance policy.
- In case the NRI taxpayer and the dependent are more than 60 years of age, then the maximum deduction available under this section is Rs. 1 Lakh.
Points for NRIs to Keep in Mind
When applying for health insurance in India, NRIs should learn that:
- If you have plans of settling in India after 4 to 5 years, it is better to buy health insurance in your presence.
- If you are planning to return to India in a time span of 3 years, it is advised to choose a policy while on a vacation to India.
- If you already have health insurance in India and are moving out of the country for a short while, it is advised to maintain your policy while being out of India.
- If you have plans to stay out of India for a long time, it is advised not to keep the plan active as you won’t be able to avail any benefits.
NRIs can make the most of their health insurance policies while still being out of India. However, it is advised to be careful while purchasing any plan and read the policy wording carefully.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.