Part of your health check just got tax-free

INSURANCE: Till now, only premium on health insurance was allowed as a deduction under 80 D

Spending on your health check-ups can also help you save tax in the new financial year. Finance Minister Pranab Mukherjee on Friday introduced a deduction of Rs 5,000 for expenses incurred on preventive health care under section 80D. Under this, citizens can save tax for the monies spent by them on their health check-ups. This will include various medical tests that individuals are asked to undergo at hospitals. The amendments made will be effective from April 1, 2012. In addition, Section 80DDB, that allows deduction for the medical treatment of specified diseases and ailments, has enhanced its limit from Rs 40,000 to Rs 60,000.

“The positive aspect of the Budget is that it has shown much more awareness and understanding on issues related to health care. It’s a step in the right direction, because giving a tax exemption to health check-up, means there is a movement towards incentivising preventive healthcare,” says Bhargav Dasgupta, managing director and chief executive, ICICI Lombard general insurance.

Section 80D allows deductions for health insurance premiums paid up to Rs 15,000 per family (spouse, self and two children), and a further deduction of Rs 15,000 if a health policy is brought in the name of parents. In case parents fall under the category of senior citizens, deductions can go up to a higher sum of Rs 20,000.

Since amendments are made into the existing section, one can make use of this deduction for preventive health care if one has not purchased a health plan yet.

BETTER TREATMENT

• Up to Rs 5,000 incurred on preventive healthcare eligible for a deduction under Section 80D
• Deduction limit for treatment of specified diseases and ailments, under Section 80DDB, raised from Rs 40,000 to Rs 60,000

However, the cap could be too small given the cost of such check-ups. The Rs 5,000-cap will be applicable for the entire family (self, spouse, children and parents). The payment made on check-ups can be made by cash or any other mode of transaction.

“This will increase the demand for medical tests and hospitals may even raise the prices on it soon. Indirectly, this may also push medical inflation up, a problem everyone is still grappling with,” says Amarnath Ananthanarayanan, managing director and chief executive, Bharti AXA general insurance.

Some insurers fear the new deduction in the section of health insurance may eat into the demand for health policies.