Corporate health insurance premiums paid entirely by employers do not qualify for tax deductions under Section 80D of the Income-tax Act, 1961. According to tax expert Chandni Anandan from Cleartax, employees cannot claim deductions when health insurance premiums are fully borne by the company under group health insurance policies. This is because employees do not incur such expenses from their own taxable income, hence no deduction can be claimed, even under the old tax regime. Under the New Tax Regime, the situation remains unchanged - employees cannot claim deductions on employer-paid health insurance premiums, regardless of whether they receive standard deduction benefits.
Employees who purchase top-up or super top-up health insurance plans independently can claim deductions under Section 80D for the premiums paid. As reported by Siddharth Maurya, Managing Director of Vibhavangal Anukulkara Pvt Ltd, the tax benefit comes according to the payee of the premium, making it beneficial for employees to have group health insurance provided by employers but claiming deductions only when premiums are paid from their own pockets. This applies even if the base health insurance is provided by the employer. Under the New Tax Regime, employees can still claim deductions for independent health insurance premiums, but the overall tax-saving potential is limited due to the regime's reduced deduction allowances.
Employees who pay additional premiums to extend employer-provided health insurance coverage to their parents can claim deductions under Section 80D, but only for the portion paid from their own pockets. According to Anandan, any additional premium directly paid by employees for parental coverage can be claimed under Section 80D, subject to applicable limits and conditions. The premium paid by the employer remains ineligible for deduction in the employee's hands. Under the New Tax Regime, this deduction remains available, though the overall tax-saving impact is constrained by the regime's limited deduction framework.
Section 80D provides tax deductions on health insurance premiums and certain medical expenses paid during a financial year, available to individuals or HUFs. As reported by Mint, the deduction under Section 80D is separate from and over the ₹1.5 lakh deduction available under Section 80C of the Income Tax Act and is only available to those opting for the old tax regime. An individual can claim deductions only on the portion of premiums that are payable by the employee, limiting deductions to employee-paid portions even when employer-paid base premiums exist. Under the New Tax Regime, while the deduction remains available, it forms part of the limited tax-saving options available to salaried employees, who must rely on standard deduction, NPS contributions, and other select benefits for tax optimization.
