I started investing in United India Super Top up Health Insurance policy for my parents. I paid the premium in the form of cash. The auditor has now told that the premium amount cannot be used for the purpose of income tax deduction since it should have been paid as cheque or via net banking. When I enquired with the insurance agent he is ignorant about it and claims that the income tax relief is available if I show the premium receipt. Which is correct?
- S. M. Abdulkadar
Premiums paid on health insurance policy for parents qualify for deduction under Section 80D of Income Tax Act only if they aren't paid in cash (they should be paid through cheque, netbanking etc). Your auditor is right in saying that as you have paid premium in cash, you are not eligible for deductions on the premium.
This article was originally published on October 10, 2014.
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