Tax benefit on health premium paid for self, dependents

For senior citizens (60 years or above during the financial year, or FY), the deduction is restricted to Rs.30,000 (including Rs.5,000 towards preventive health check–up) for the FY


Pradeep Gaur/Mint
Pradeep Gaur/Mint

I pay for the healthcare cover premium for both me (67) and my wife (63). Will I get an additional tax benefit for this?

—Rishabh Mehta

An individual can claim deduction from total income in respect of payment made towards health insurance premium under section 80D of the Income-tax Act, 1961. The deduction from total income can be availed towards payment of health insurance premium for self, spouse, dependent children and parents subject to prescribed conditions.

For senior citizens (60 years or above during the financial year, or FY), the deduction is restricted to Rs.30,000 (including Rs.5,000 towards preventive health check–up) for the FY. But the deduction towards premium is available only if it is paid by any mode other than cash. Since you are paying towards health insurance for self and spouse and both of you qualify as senior citizens during FY16, you can claim maximum deduction from the total income up to Rs.30,000 per FY in aggregate for the premium paid for both of you.

I gifted my friend some money (Rs.1 lakh) four months ago. Do I need to show this when I file my returns this year?

—Vibhuti Singh

Under section 56 of the Act, any amount exceeding Rs.50,000 received without consideration during the FY is taxable in the hands of recipient as ‘income from other sources’. But exemption is available if the money is received from a relative or for specified purposes. Your friend will be taxed but there will be no tax implications in your hands. You are not required to report the transaction in your personal income tax return, but it’s advisable to have a gift deed to substantiate the genuineness of the transaction in case of an enquiry.

My provident fund (PF) subscription is less than 5 years with the old employer. I have got a job in another company and want to withdraw the PF amount. Will I be taxed?

—Rakhi Sharma

The PF withdrawal is taxable if it is withdrawn without rendering continuous services for five years or more. However, if the accumulated PF balance maintained with the old employer is transferred to the PF account of the current employer, then the period of previous employment is also included as part of continuous service. So, you will be taxable on the accumulated PF balance withdrawn in the financial year (FY) of withdrawal.

If you transfer the accumulated PF funds maintained with the old employer to the PF account of the new employer, at the time of withdrawal of PF maintained with new employer, the period of services rendered with ex-employer will also be included. Accordingly, if the cumulative years of service is more than five years, there won’t be any tax implications on PF withdrawal. Also, the withdrawal will be as per the aforesaid provisions, which require you to have a non-employment period of two months after leaving your job.

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