The deduction will be allowed on proportionate basis for the number of years for which health insurance cover
The Finance Minister has increase the tax deduction on health insurance premium for senior citizens from Rs 30,000 to Rs 50,000. But what if you have bought a single premium health insurance policy for a number of years with a huge upfront premium payment above Rs 50,000? Will your benefit be limited to Rs 50,000?
The Union Budget says, in that case, the deduction shall be proportionate to the number of years. “In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit,” the Budget fine-print says.
The Rs 50,000 deduction, which will be available from April 1, 2019, has been made available to senior citizens in respect of health insurance premium and medical treatment Section 80D. It presently allows a deduction of up to Rs 30,000 to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citizen.
Providing relief on certain critical illness, the Finance Minister also enhanced deduction to senior citizens for medical treatment of specified diseases Section 80DDB of the Act, providing that a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen up to Rs 80,000 and in case of senior citizens up to Rs 60,000.