Question: In case the premium for medical health insurance for greater than a 12 months has been paid in a single 12 months, can professional rata deduction be availed u/s 80D of the Income Tax Act, 1961?

Answer by Dr Suresh Surana, Founder, RSM India: Taxpayers can avail the good thing about the premium paid for multi-year health insurance policies to be distributed pro-rata over the coverage time period. Thus, in case the premium for health insurance for greater than a 12 months has been paid in a single 12 months (i.e. single premium/ lump sum premium paid for a number of years), the deduction shall be allowed proportionately through the years for which the good thing about medical health insurance is offered.

As per the provisions of this part, a deduction equal to the suitable fraction of the quantity shall be allowed for every of the related monetary 12 months.

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“Appropriate fraction” means the fraction, the numerator of which is one and the denominator of which is the overall variety of related monetary years lined underneath insurance coverage.

For occasion, if a single premium of Rs 30,000 is paid for a 2-year coverage, then the taxpayer can avail a deduction u/s 80D of Rs 15,000/- every year. However, such quantity of Rs 15,000 could be once more restricted to the utmost quantity of deduction which could be claimed u/s 80D of the Income Tax Act, 1961.

This Q&A sequence is printed each week on Thursday.

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