Mounting Treatment Costs May See Hike in Tax Break on Mediclaim Premiums
With the Union Budget 2024 around the corner, expectations are high that Finance Minister Nirmala Sitharaman will raise the limit for claiming income tax deductions on health insurance premiums under Section 80D.
The current limit of ₹25,000 for individuals below 60 years has remained unchanged since 2015, even as treatment costs and mediclaim premiums have shot up exponentially post-pandemic. Many feel the tax benefit needs revision to offset the impact of rising medical inflation.
According to PolicyBazaar data, hospitalization expenses for various ailments have doubled in the last five years. But the static deduction limit under Sec 80D means taxpayers can’t claim full tax relief on inflated mediclaim premiums.
For instance, the annual premium for a ₹5 lakh family floater plan for spouse and two kids can go upto ₹36,000. A ₹20 lakh cover costs around ₹47,000 yearly. But the ₹25,000 deduction limit leaves a large chunk of the premium that can’t be exempted.
Experts argue the tax benefit must be hiked to provide much-needed respite to middle class taxpayers struggling with exorbitant medical bills. The last enhancement came in Budget 2018 when the limit for senior citizens was increased from ₹30,000 to ₹50,000.
All eyes are now on FM Sitharaman to see if Budget 2024 brings cheer to taxpayers by raising the 80D deduction limit. The tax break will especially help those claiming deductions under the old income tax regime, as the benefit is not available under the new regime.