GST in Health Insurance & Tax Deductions on Health Insurance
Having health insurance in today's date is one of the most important things to live a stress-free life. With the increasing cost of quality healthcare, you cannot ignore the risk of unexpected misfortunes. Therefore, health insurance should be your must-have policy. Moreover, health insurance is a service subject to GST, meaning that consumers have to pay GST on their health insurance premiums, claims, and renewals.
This post will discuss how you can save GST on the health insurance policy and what documents you may need when claiming tax exemption.
GST on health insurance refers to applying the Goods and Services Tax (GST) to India's health insurance policies and their related financial payments. GST is a consumption-based tax system implemented in India to simplify and streamline the previous indirect tax system.
When a person buys a health insurance policy, they must pay GST on the health insurance premium. GST is also applicable when a policyholder makes a claim. The GST charged on the claim amount is either 12% or 18% depending on the GST rate applicable to the healthcare service provided. GST is also applicable on health insurance renewals; the GST rate for health insurance renewals is 18%. However, for policies issued to senior citizens, the GST rate is reduced to 12%.
As per Section 80D of the Income Tax Act, individuals can save GST on health insurance. Suppose you are the only person in your family purchasing a health insurance policy for yourself and your family members. With the help of Section 80D, you can reduce your taxable income by a certain amount. But the amount can differ according to who is covered by the policy.
For example, if you are purchasing a health insurance policy for your parents who are below 60, it can help you save INR 25,000/- annually. And parents over the age of 60 can assist you in receiving up to INR 50,000/- in policy relaxation. Moreover, you can save up to a lakh annually as a senior citizen.
The following documents may be required to claim tax benefits for health insurance under GST.
1. Health insurance policy: A copy of the health insurance policy that you purchased should clearly mention the premium amount and the applicable GST rate.
2. GST invoice: A copy of the GST invoice issued by the insurance company for the premium paid, which should mention the GST rate, GST amount, and the HSN code of the service.
3. Medical bills: Original and photocopy all the medical bills, which should mention the GST rate, GST amount, and the HSN code of the service.
4. ID proof: A copy of your PAN card or any other valid ID proof.
5. Claim form: A copy of the claim form you have filled out and submitted to the insurance company.
It's important to note that these documents may vary depending on the insurer and the tax benefit claimed. It's always best to check with the insurance company for the documents required to claim GST tax benefits.
Health insurance is a must-go-for insurance policy. Therefore, you should not miss it just because of the tax. You can save GST on your health insurance policy under section 80D. But make sure to check with your insurance provider for the terms and conditions of your plan.