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A guide to tax benefits of health insurance
akssai.com 17/04/2020 No Comments
There are five very important things that you have to know about the tax benefits of health insurance plans.
What are the boundaries for claiming tax benefits for medical health insurance
The premium paid in direction of medical health insurance insurance policies qualifies for deduction underneath Part 80D of the Income Tax Act. The profit is on the market to people on medical health insurance premium paid for self, partner, kids, and parents. Importantly, it doesn’t matter whether the youngsters or dad and mom are dependent on you or not.
The quantum of tax benefit will depend on the age of the person who’s medically insured. On the premium paid for self, partner, kids, and parents, the maximum deduction that may be availed is Rs 25,000 for 12 months, provided the age of the person is just not above 60.
If the premium paid by a person is in direction of health policy for his or her father or mother who’s a senior citizen of age 60 or extra, the utmost is capped at Rs 50,000. A taxpayer may, subsequently, maximize tax benefit underneath part 80D to a complete of Rs 75,000 if his age is under 60 whereas dad and mom age is above 60.
For these tax payer people who’re of age 60 or extra and are additionally paying the medical health insurance premiums for his or her mother and father, the utmost tax benefit underneath part 80D would, subsequently, be a total of Rs 1 lakh.
The maximum that a person can save underneath part 80D (Rs 25,000 considered) for those paying 5.20 %, 20.8 % and 31.2 % tax is Rs. 1,300, Rs 5,200, and Rs 7,800 respectively. This shall be over and above something one saves underneath part 80C of the Income Tax Act.
Inside the maximum limit of Rs 25,000 or Rs 30,000, the preventive health check-ups get an advantage of as much as Rs 5,000. This implies when you pay a premium of Rs 20,000 in direction of Mediclaim and endure a health check-up costing Rs 5,000, the overall Rs 25,000 could be availed underneath part 80D. Most outstanding hospitals provide preventive health check-up packages. With lifestyle ailments on the rise, it is all the time better to regulate one’s health.
Tax benefit accessible on all sorts of medical health insurance
Each ‘indemnity’ and ‘defined benefit’ sorts of medical health insurance plans would qualify for tax benefit. Not simply the indemnity plans such as a particular person medical health insurance plan popularly known as Mediclaim and Family Floater plans but in addition defined benefit plans similar to everyday hospital money plan and critical illness plan of any standalone medical health insurance firm or a normal insurance firm would qualify for such tax profit.
One could pay a premium in money, however, in an effort to avail tax benefit, the income tax guidelines disallow tax profit on the premium paid in cash. One could, however, pay by Internet banking, cheque, draft and even by bank card to get tax benefit on premium. Nevertheless, cash payment for preventive health check-up is eligible for section 80D benefit.
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akssai.com 15/04/2020 No Comments
income taxsalarytdstds on new tax regime
A Guide To TDS ON NEW TAX REGIME
akssai.com 14/04/2020 No Comments
The finance ministry has clarified that an employer must deduct TDS for FY 2020-21, from a worker’s salary on the premise of the brand new decrease tax regime if the employee opts for it and informs the employer of the identical. It’s additionally clarified that after the regime is opted by a person at the beginning of the financial year, then such a choice can’t be modified in the course of the financial year as far as TDS by the employer is concerned. Nevertheless, the choice will be modified at the time of income tax submitting.
The circular addressed the problem of tax deduction at supply from an employee’s salary in case the worker opts for a brand new tax regime in FY 2020-21.
As per the circular, an employee having earnings apart from the enterprise income (similar to salary income, and so on.) must inform his/her employer of his/her alternative tax regime for the continued FY 2020-21. The employer must deduct taxes from the employee’s salary accordingly.
As per the circular, “An employee, having earnings apart from the earnings underneath the top “profit and gains of enterprise or career” and aspiring to go for the concessional fee underneath section 115BAC of the Act, could intimate the deductor, being his employer, of such intention for every earlier yr and upon such intimation, the deductor shall compute his complete earnings, and make TDS thereon in accordance with the provisions of section 115BAC of the Act.”
This may imply that if an employee opts for the brand new tax regime then TDS on salary can be deducted as per the estimated complete tax calculated as per the brand new decrease tax rate regime as an alternative of as per the estimated tax calculated as per previous tax regime.
The circular clarifies that after the regime is opted by a person at the beginning of the financial year, then such choice can’t be modified in the course of the financial year. Nevertheless, as per the circular, the choice will be modified on the time of submitting income tax returns.
“The intimation so made to the deductor shall be just for the needs of TDS throughout the earlier year and can’t be modified throughout that year. Nevertheless, the intimation wouldn’t amount to exercising a choice when it comes to sub-section (5) of section 115BAC of the Act and the individual shall be required to take action together with the return to be furnished underneath sub-section (1) of section 139 of the Act for that earlier year. Thus, the choice on the time of submitting of return of income underneath sub-section (1) of section 139 of the Act might be completely different from the intimation made by such employee to the employer for that earlier year”, said the circular.
Additionally, as soon as an employee having enterprise income opts for a selected tax regime at the time of submitting income tax return, then such an employee can’t change the tax regime sooner or later. Subsequently, the tax regime as soon as opted by an employee on the submitting of ITR, then sooner or later years, such a tax regime has to be communicated to the employer, for the aim of deduction of tax.
As per the circular, “Additional, in case of an individual who has income underneath the top “profit and gains of enterprise or career” additionally, the choice for taxation underneath part 115BAC of the Act as soon as an exercise for an earlier year on the time of submitting of return of income underneath sub-section (1) of section 139 of the Act can’t be modified for subsequent earlier years besides in sure circumstances. Accordingly, the above clarification would apply to such an individual with a modification that the intimation to the employer in his case for subsequent earlier years should not deviate from the choice underneath part 115BAC of the Act as soon as exercised in an earlier year.”
The clarification has come after many tax consultants and chartered accountants had raised queries relating to how TDS was to be deducted from the salaries of workers as they might select between two tax regimes.