• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Mumbai, Feb. 7 Is the premium paid on the new unit-linked health insurance policies fully exempt from income tax?

LIC, the first one to launch the scheme last week, claims that the entire premium to the scheme is eligible for tax exemption under Section 80 D of the Income-Tax Act. However, the insurance regulator does not agree.

Mr C.S Rao, Chairman, Insurance Regulatory and Development Authority, says “The investment portion of the premium does not actually qualify under Section 80D for tax exemption.”

According to the regulator, splitting the health insurance premium and investment component of the premium under Sections 80D and 80C, respectively, would be the right tactic to adopt by the corporation. The IRDA has written a letter to LIC seeking an explanation on the issue.

LIC, which launched “Health Plus” on Monday, had announced that the premium in full would qualify under Section 80 D for tax exemption since it was a health insurance product. The maximum qualifying amount of health insurance premium under this section is Rs 15,000 and Rs 20,000 in the case of senior citizens.

Life insurance premium, among other tax saving instruments, on the other hand, qualifies for tax exemption under 80C with a ceiling of Rs 1 lakh.

Interestingly, Reliance Life Insurance today launched a unit-linked health insurance policy.

The plan offers market-linked returns and health protection and the income-tax benefit is split under Sections 80D and 80C.

LIC officials maintain that according to tax experts the premium would qualify in full for exemption under 80D.

“Our health insurance product has been filed under the regulation for health policies. We are not offering a life cover in this product. We had sought the opinion of tax experts on this,” said Mr G.N. Agarwal, Executive Director (Actuarial), LIC.

He added that that the withdrawals from the investment fund would be for meeting domiciliary treatment expenses or medical expenses.

The corporation is now firming up a reply to the IRDA’s letter.

More Stories on : Insurance | Income Tax | Regulatory Bodies & Rulings | Health

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
GDP growth for 2007-08 estimated at 8.7%

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line