Tax exemption for health insurance policy holders mooted
By A Correspondent - New Delhi

The Eradi Committee, which has studied the taxation aspects of life insurance sector, has asked the government not to tax surplus income of health insurance policy holders of life insurance companies since general insurance policy holders enjoyed tax exemption.

“There were strong arguments for not assessing tax of policy holders share of surplus in health insurance business as similar policies issued by general insurance companies were exempted,” committee chairman, V U Eradi, said.

The committee is of the view that exemption of taxes for these health insurance policy holders would ensure a level-playing field and increase the health insurance cover for many more people, he said.

At present, annuities and pensions of policy holders are fully taxed, though there is a case for exempting them from tax as annuities and pensions represent a return on to the policy holder of the premia paid by him, he said. Government should tax only that portion of the benefit that represented income on savings, he added. (PTI)