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T. Banusekar

Our employer company has made arrangements for a group mediclaim insurance with National Insurance Company. As a result , there is a substantial reduction in the premium which is paid by the company and recovered from our salary. The insurance company issues the receipt in the name of the company.

Will it be possible for me to claim deduction in respect of the premium that is recovered from me under Section 80D of the Act? Can the employer take cognisance of the same in deducting tax at source?

T. Narendran

Reply

Section 80D of the Act allows deduction in respect of medical insurance premium paid by an assessee by cheque in the previous year out of his income chargeable to tax subject to a maximum limit of Rs 10,000 (Rs 15,000 in case of senior citizens). This insurance premium should have been paid to effect or keep in force an insurance on the health of the assessee or the spouse of such an assessee or dependent parents or dependent children of the assessee where such assessee is an individual.

The section also requires that such insurance should be in accordance with a scheme framed by the GIC or by any other insurer approved by the IRDA. There should be no difficulty in claiming a deduction in respect of the premium paid by the employer to the National Insurance Company and recovered from the employee so long as the employer has made the said payment by cheque.

Since the premium is recovered from the employee's salary, it can definitely be said that the premium is paid out of the income chargeable to tax of the employee. The employer can take cognisance of the said insurance premium in computing the tax that is to be deducted at source.

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