How Can NRIs Save Taxes on Health Insurance in India?

As Non-Resident Indians (NRIs), managing finances across borders can be complex, especially when it comes to ensuring healthcare for yourself or your family in India. Health insurance is a vital tool not only for securing medical coverage but also for optimising your tax obligations. In India, we offer comprehensive health insurance plans that allow NRIs to leverage tax benefits of health insurance plans while safeguarding their loved ones. This blog explores how NRIs can save taxes on health insurance premiums, including the unique opportunity of GST refunds, and provides practical steps to maximise health insurance tax benefits.

Understanding Tax Benefits for NRIs on Health Insurance

Health insurance is more than just a safety net for medical emergencies; it’s a strategic financial tool that offers tax benefits of health insurance in India. Under Section 80D of the Income Tax Act, 1961, NRIs can claim deductions on premiums paid for health insurance policies purchased in India. This applies to policies covering themselves, their spouse, dependent children, or parents. The deduction limits are:

• Up to ₹25,000 annually for premiums paid for self, spouse, and dependent children, provided no insured member is above 60 years.
• Up to ₹50,000 annually if the policyholder or any insured family member is a senior citizen (above 60 years).
• An additional ₹25,000 for a separate policy covering parents, or ₹50,000 if the parents are senior citizens.

For example, if you’re an NRI below 60 and purchase a family floater plan for yourself and your spouse, you can claim up to ₹25,000. If you also buy a policy for your parents (one of whom is above 60), you can claim an additional ₹50,000, totaling ₹75,000 in deductions. These tax benefits private health insurance provisions reduce your taxable income, lowering your tax liability in India.

Additionally, NRIs can claim up to ₹5,000 within the Section 80D limit for preventive health check-ups, further enhancing the health insurance tax benefit. This makes investing in our plans a dual-purpose strategy: securing healthcare and optimising taxes.

The Unique GST Refund Opportunity for NRIs

A lesser-known but significant advantage for NRI health insurance is the ability to claim a Goods and Services Tax (GST) refund on health insurance premiums. In India, an 18% GST is levied on health insurance premiums, increasing the overall cost. However, NRIs who pay taxes in their country of residence can avoid this additional burden by claiming a GST refund, thereby maximising tax benefits private health insurance.

To be eligible for a GST refund, NRIs must meet specific criteria:

1. NRI Status: You must qualify as an NRI under the Income Tax Act, typically by residing outside India for at least 180 days in the financial year.
2. Policy Proposer: The NRI must be the proposer and one of the insured members of the policy.
3. Payment via NRE Account: Premiums must be paid through a Non-Resident External (NRE) account to comply with foreign currency regulations.
4. Annual Policy Tenure: The policy must have a one-year term, and you must explicitly opt for the GST refund during purchase or renewal.

The process involves submitting documentation such as a Tax Residency Certificate (TRC), proof of foreign address, and NRE account bank statements showing the premium payment. We streamline this process by guiding our customers through each step, ensuring a hassle-free experience. By claiming the GST refund, NRIs can significantly reduce the cost of taxing health insurance benefits, making our plans even more cost-effective.

Why NRIs Should Invest in Health Insurance in India

For NRIs, purchasing health insurance in India is a prudent choice for several reasons beyond tax benefits of health insurance plans. Many NRIs maintain strong ties with India, often visiting or planning to return permanently. Our health insurance plans provide comprehensive coverage for medical emergencies during such visits or for family members residing in India. Here’s why our plans stand out:

• Cashless Hospitalisation: Access to a wide network of top-tier hospitals across India for seamless, cashless treatment.
• Coverage for Pre-existing Conditions: After a waiting period (typically 2-4 years), our policies cover pre-existing conditions, which is crucial if you plan to relocate to India.
• Affordable Premiums: Compared to global markets, our premiums are cost-effective, offering high coverage at lower costs.
• Tax Savings: The combination of Section 80D deductions and GST refunds enhances the health insurance tax benefit, making it a financially savvy investment.

For NRIs with parents or dependents in India, our family floater plans ensure quality healthcare without financial strain. Additionally, buying a policy early allows you to complete waiting periods for pre-existing conditions, ensuring uninterrupted coverage upon your return.

Employer-Provided Health Insurance and Tax Implications

Some NRIs may wonder about employer tax benefits for health insurance, especially if they have coverage through their employer abroad. In India, group health insurance provided by employers is generally not taxable for employees unless the premium exceeds ₹15,000 per employee annually. Any excess is treated as a taxable perquisite. However, employer-provided plans abroad may not cover treatments in India, making it essential to invest in a local policy.

Our individual and family plans complement any existing employer coverage, ensuring comprehensive protection during your stays in India. Moreover, the employer tax benefits for health insurance in India don’t apply to NRIs purchasing private policies, but the Section 80D deductions and GST refunds more than compensate for this.

Steps to Maximise Tax Savings on Our Health Insurance Plans

To fully leverage taxing health insurance benefits, NRIs should follow these actionable steps:

1. Choose the Right Plan: Select a policy that aligns with your healthcare needs and tax-saving goals. Our family floater or senior citizen plans are ideal for covering dependents in India.
2. Pay Premiums via NRE Account: Ensure compliance with FEMA regulations by using an NRE account for premium payments.
3. Opt for GST Refund: During purchase or renewal, explicitly select the GST refund option and submit required documents like TRC and NRE account statements.
4. Maintain Documentation: Keep records of premium payments, policy documents, and health check-up receipts to claim deductions under Section 80D.
5. File ITR in India: If you have taxable income in India (e.g., rental income or dividends), file your Income Tax Return (ITR) to claim deductions and GST refunds.
6. Consult a Tax Advisor: Tax laws can be complex, especially with Double Taxation Avoidance Agreements (DTAA). A tax expert can help optimise your savings.

By following these steps, NRIs can seamlessly integrate tax benefits and private health insurance into their financial planning while ensuring robust healthcare coverage.

Key Considerations for NRIs

While our plans offer significant health insurance tax benefits, NRIs should keep a few points in mind:

• Geographical Coverage: Our policies primarily cover treatments within India, so clarify coverage terms if you need international protection.
• Waiting Periods: Pre-existing conditions have waiting periods, so purchase policies well in advance if planning to relocate.
• Policy Tenure: GST refunds are available only for annual policies, not multi-year ones.
• Documentation: Accurate and complete documentation is critical for claiming GST refunds and tax deductions.

We prioritise transparency, ensuring our customers understand these nuances to make informed decisions.

Bottom Line

For NRIs, health insurance in India is a powerful tool that combines medical security with substantial tax savings. By leveraging tax benefits for NRIs Buying Health Insurance in India under Section 80D and claiming GST refunds, you can reduce your tax liability while ensuring quality healthcare for yourself and your family. Our comprehensive plans, tailored for NRIs, offer cashless hospitalisation, coverage for pre-existing conditions, and affordable premiums, all while maximising taxing health insurance benefits. Whether you’re visiting India frequently or planning to return, investing in our health insurance plans is a strategic step toward financial and health security. Consult a tax advisor and explore our offerings to optimize your health insurance tax benefit today.

FAQs

1. Can NRIs claim tax deductions on health insurance premiums paid in India?

   Yes, NRIs can claim deductions under Section 80D of the Income Tax Act, 1961, for premiums paid for themselves, their spouse, dependent children, or parents. The limit is ₹25,000 for non-senior citizens and ₹50,000 for senior citizens.

2. What is the GST refund for NRIs on health insurance premiums?

   
   NRIs paying taxes in their country of residence can claim a refund of the 18% GST levied on health insurance premiums in India, provided they meet eligibility criteria like paying through an NRE account and opting for the refund.

3. Do employer-provided health insurance plans affect NRI tax benefits?

   
   Employer tax benefits for health insurance don’t apply to private policies purchased by NRIs. However, NRIs can claim Section 80D deductions and GST refunds on our plans, regardless of employer coverage.

4. What documents are required to claim a GST refund?

   
   You need a Tax Residency Certificate (TRC), proof of foreign address, NRE account bank statements, and a copy of the policy document. We assist in ensuring all documentation is complete.

5. Can NRIs buy health insurance for parents living in India?

   
   Yes, NRIs can purchase family floater or senior citizen plans for parents in India, claiming up to ₹25,000 or ₹50,000 in deductions under Section 80D, depending on the parents’ age, enhancing tax benefits private health insurance.

6. How to claim GST refund for NRI?

   The NRI GST refund process is fairly simple but requires following a set of rules. As an NRI, if you purchase goods in India and plan to carry them outside the country, you can apply for a GST refund at the airport before departing. The process involves showing original purchase invoices at the refund counters, ensuring the goods are unused, and submitting required forms as proof of export.

   When it comes to how to claim GST refund for NRI, the eligibility depends on whether the goods you bought fall under refundable categories. Not all items are covered, so it’s important to confirm beforehand. For example, services such as hotel stays or restaurant bills generally do not qualify, while goods like electronics, apparel, and accessories often do.

7. How to get GST refund as NRI?

   Getting a GST refund as an NRI means understanding the correct documentation and following the NRI GST refund process at the airport. You’ll need:

   - A valid passport and visa.

   - Original tax invoices from registered retailers that clearly show GST paid.

   - Goods purchased within the eligible period before your departure.

   To simplify, how to claim GST refund for NRI works like this: show invoices at the designated GST refund counter, verify the items with customs if required, and submit the claim form. Once approved, the refund can either be credited to your international credit card or processed through other eligible modes. Some airports provide instant refunds in cash, while others credit it electronically after verification.

8. What is the minimum amount to claim GST refund?

   The NRI GST refund process also comes with a threshold limit. The minimum purchase amount required to claim a GST refund varies depending on government regulations at the time, but generally, you need to have shopped for a minimum total bill value (for example ₹5,000 or more from one retailer) to be eligible. Smaller purchases usually do not qualify, as the refund mechanism is designed to benefit NRIs making significant purchases for export.

   So, when thinking about how to claim GST refund for NRI, remember that if your purchase value is below the minimum threshold, you won’t be able to get a refund. Always check your total bill value and ensure it meets the required minimum amount before heading to the refund desk.