Can NRIs Save Tax through Health Insurance Bought in India?| North Loop Official Blog
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05 Nov 2020

Can NRIs Save Tax through Health Insurance Bought in India?

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Introduction -

As an NRI, you can buy a health insurance policy in India to secure your health as well as that of your family members. But what are the health insurance tax benefits that you can enjoy by doing so? Let us find out by reading further.

Opting for health insurance policies in India not only provides a medical coverage but also makes you eligible for deductions on your taxable income earned in the country. They essentially come with dual benefits by providing both medical assistance for you and your family along with tax benefits. Before we look at the tax implications of buying such policies in India, let us first understand some pivotal points regarding the same.

Some points that you should know when opting for health insurance in India -

Even though buying health insurance with tax benefits in India can get beneficial in several ways, there are some points you should remember. One of these includes the fact that the treatment applicable to most health policies offered here get confined to the country. That means if you are looking to buy a health insurance policy in India for tax purposes and also desire to use the treatment services overseas, you will not be allowed to do so. All of the coverage provided by these medical insurance policies are limited to the expenses incurred on hospitalisation or other treatments, within the territory of India.

Another point that you should remember when buying health insurance policies in India for yourself is that the process can become a tad bit difficult as compared to buying one for your parents or family residing in the country. That is because many insurance companies find it complicated to collect facts and ascertain the authenticity of claims made by NRIs. Therefore, they consider it risky to offer policies to Non-Indian residents. That is also the reason as an NRI it can be a suitable alternative to buy a health policy in your current foreign resident country. However, the payment of premium for the same will not be eligible for tax-benefit in India. There are also digital platforms that offer quick and paperless online insurance policies. At North Loop itself, we provide insurance policies without much paperwork and a completely digital application process.

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Let us now come to NRI health insurance tax benefits in India -

The first question that comes to mind is - is health insurance tax deductible? The answer is yes. NRI health insurance tax exemption in India include deduction up to Rs.25000 for premiums paid for the health insurance of self, spouse, and dependent children, according to Section 80D of the Income Tax Act, 1961. That also includes the expenditure on preventive health check-up of up to Rs.5000. That involves expenses incurred for early detection of any disease that may occur in the future and other safeguard measures for the same. The deduction allowed on preventive health check-up applies to self, spouse, parents and dependent children.

An additional health insurance tax exemption of Rs.25000 is also available on the premium paid for the insurance of parents aged up to 60 years. However, if the parents are above 60 years of age, the deduction on the premium paid for their health insurance is Rs.50000. If both you and your parents for whom the policy gets taken are above 60 years, the maximum deduction that can get availed under Section 80D is Rs.1 lakh.

Conclusion -

The tax deductions on specified limits of health insurance premiums can get claimed for premiums paid for self as well as parents, spouse and dependent children. However, it is only available for premiums paid towards health insurance policies that are approved by the IRDAI or Insurance Regulatory and Development Authority of India. Therefore, if you want to opt for health insurance policies and at the same time, enjoy saving on your tax, you should look out for ones that are approved by IRDAI. Also, other than tax considerations, you should consider other aspects such as policy terms concerning geographical areas covered, FEMA regulations, rules for settlement or repatriation of insurance claims etc. Now that we have answered your query to ‘is health insurance tax deductible’, you can buy health insurance with tax benefit online via North Loop. The process is quick, effortless with minimal paperwork and fast approvals.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.