How Can NRIs Save Taxes on Health Insurance in India?

Health insurance is crucial for financial security, especially for Non-Resident Indians (NRIs) who want to ensure their families in India have proper medical coverage. Apart from its main purpose, the mediclaim policy for family also helps NRIs save on taxes. Even if they live abroad, NRIs can benefit from tax advantages related to health insurance premiums paid in India, which may include getting a GST refund. This blog offers practical advice and tips for NRIs to manage medical insurance investments in India effectively while maximising tax benefits.

Understanding Health Insurance Tax Benefits for NRIs

Health insurance premiums paid by NRIs in India are eligible for tax benefits under Section 80D of the Income Tax Act, 1961. This provision allows NRIs to claim deductions on medical insurance premiums paid for themselves, their families, and their parents. Additionally, NRIs can avail of a GST refund on medical insurance premiums, further enhancing tax savings.

Eligibility Criteria for GST Refund on Medical Insurance

To qualify for a GST refund on health insurance premiums, NRIs must meet certain criteria:

• NRI Status

  NRIs must meet the criteria outlined in the Income Tax Act to be classified as Non-Resident Indians (NRIs) for eligibility.

   

• Mode of Payment

  Insurance premiums should be paid through an NRE (Non-Resident External) account, ensuring compliance with regulations for foreign currency transactions.

   

• Duration of Stay Abroad

  NRIs should have resided abroad for a minimum of 180 days in the financial year to demonstrate their non-resident status and eligibility for the GST refund.

   

• Opting for Refund

  NRIs need to explicitly select the GST refund option while purchasing or renewing their mediclaim policy for family in India, ensuring proper documentation and adherence to procedures.

   

Process to Obtain GST Refund on Health Insurance for NRIs

NRIs can follow these steps to obtain a GST refund on their insurance premiums:

Policy Purchase

Choose the best health insurance company and plan suitable for NRIs and complete the proposal form with accurate details.

Premium Payment

Make the payment for the medical insurance premium using an NRE (Non-Resident External) account, ensuring compliance with regulations.

Document Submission

Submit necessary documents to the insurance provider, including KYC documents, Tax Residency Certificate (TRC) to prove NRI status, international address proof, and a bank statement of the NRE account used for premium payment.

Refund Request

Contact the insurance company or intermediary, to initiate a GST refund request. Provide all required details and documentation.

Verification and Refund

The insurance company will verify the submitted documents and process the GST refund accordingly. The refund will be credited to the same NRE account from which the premium payment was made, within the specified timeframe.

Documents Required for GST Refund

NRIs need to submit the following documents to avail of the GST refund on mediclaim premiums:

KYC Documents

NRIs need to provide proof of identity and address, such as Aadhaar card, passport, or any other government-issued ID.

Tax Residency Certificate (TRC)

NRIs must furnish a Tax Residency Certificate as proof of their tax residency status in the foreign country where they reside.

International Address Proof

NRIs should submit documents verifying their international address, such as an international driving license, utility bill, or any other valid proof of residence abroad.

NRE Account Statement

NRIs must provide the last six months' bank statement of their Non-Resident External (NRE) account, which was used for payment of insurance premiums.

Benefits of GST Refund for NRIs

Here are the benefits of GST Refund for NRIs in Health Insurance: 

Tax Savings

NRIs benefit from tax savings by claiming a GST refund on health insurance premiums paid in India, thereby avoiding double taxation and reducing the overall financial burden.

Financial Planning

Opting for the best health insurance company in India offers NRIs and their families financial security and medical coverage, allowing for better financial planning and mental peace in case of unforeseen medical expenses.

Ease of Documentation

With proper documentation and support from insurance providers, NRIs can smoothly steer the process of obtaining GST refunds, ensuring a hassle-free experience and maximising their benefits from insurance coverage.

Final Words

For NRIs, investing in mediclaim policy for family ensures comprehensive medical coverage and also offers significant tax benefits, including the opportunity for a GST refund. By understanding the eligibility criteria, following the requisite process, and providing necessary documentation, NRIs can optimise tax savings on insurance premiums while safeguarding their health and financial well-being.

At Niva Bupa, we offer tailored medical insurance solutions for NRIs, ensuring reliable coverage and expert assistance every step of the way. Ultimately, medical insurance serves as a crucial investment avenue, offering financial protection and tax efficiency. With our support and proper planning, you can maximise tax savings and secure your medical insurance needs in India, providing peace of mind for yourself and your family.

Choose the best health insurance company today!