80D covers group mediclaim
QI have some queries on taxability of salary income earned in Switzerland in India. I had stayed in Switzerland on deputation for 80 days in previous fiscal year. I have already paid 11.5 per cent tax to the Switzerland government on my salary income. My contribution for provident fund in India was deducted from my salary in Switzerland. My employer is a US-based company registered in both India and Switzerland. SUMIT MEHTA
Hyderabad A) In India, tax on income will depend on your residential status as per the Income-Tax Act, 1961. A person is an Indian resident for a particular financial year if:
He/she is in India for at least 182 days during the financial year or;
An individual lived in India for at least 60 days during the previous year and have lived for at least 365 days during the last four years.
However, only the first condition is applicable, if you are an Indian citizen working abroad or a member of a crew working on an Indian ship, which means if you spend at least 182 days in India during the financial year, your status will be “resident”.
So, you being a resident of India, your global income will be taxed in India whether it is earned in India or outside India subject to DTAA (Double Taxation Avoidance Agreement) with the foreign countries.
QMy company has made arrangements for a group mediclaim insurance with National Insurance Company. As a result, there is a substantial reduction in the premium which is paid by the company and recovered from our salary. The insurer issues the receipt in the name of the company. Will it be possible for me to claim deduction in respect of the premium that is recovered from me under Section 80D of the Act? Can the employer take cognizance of the same in deducting tax at source? RAJESH KUMAR
Kochi A) Section 80D of the Income-Tax Act, 1961, allows deduction in respect of medical insurance premium paid by an assessee by cheque in previous year out of his income chargeable to tax.
This insurance premium should have been paid to effect or keep in force an insurance on the health of the assessee or the spouse of such an assessee or parents or dependent children of the assessee where such assessee is an individual.
There should be no difficulty in claiming a deduction in respect of the premium paid by the employer to National Insurance Company and recovered from the employee so long as the employer has made the said payment by cheque.
Since the premium is recovered from the employee’s salary, it can definitely be said that the premium is paid out of the income chargeable to tax of the employee. The employer can take cognizance of the said insurance premium in computing the tax that is to be deducted at source.