Mr X has paid a health insurance premium amounting to INR 11,800 which included GST of INR 1800.Whether, Mr X be eligible for a deduction under section 80 D of the Income Tax Act,1961 of entire INR 10000/-(i.e., health insurance premium excluding GST) or for entire amount of INR 11800.
Ans: Section 80 D of the Income Tax Act, 1961, (‘IT ACT, 1961’) entitles specified taxpayers to claim deduction for entire amount (up to a specified limit) paid to the insurance company for specified insurance schemes.
Under the GST Law, a supplier of eligible services charges GST from the recipient of the said services. The services provided by the insurance companies are taxable under GST, therefore the insurance companies recover GST from the receipt of insurance services in addition to the actual value of insurance services provided.
On a combined reading of the above provisions of the Income Tax and GST Laws, the entire amount (up to specified limit) including GST, is eligible for deduction under section 80D of the IT ACT, 1961.
Therefore, in the given case Mr X is eligible for the deduction of the entire amount of INR 11,800 (including GST of INR 1800), paid to the insurance company.