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Provisioning for Benefit in case of hospitalization expenses

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     on  22 November 2010    

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As a citizen of India, I would like to bring forth an issue which I feel may be given a serious thought for the benefit of all.

 

 Slabs of individual tax payer depends upon his/her income and he is also benefited by tax exemption to a certain limit. The tax exemption limits has rightly addressed the issues by segregating men, women and senior citizen for the tax relief depending upon life style and basic needs.

 

 In a contrarian view let us examine the business tax –

 

Businesses or profession pay Income tax on profit after due care of expenses, while doing service in an organization an individual also does business and the capital of an individual is either his training or educational qualification or a combination of both. There appears to be no difference in principle as to a business income or income under the head salary. But the salaried people are deprived of justifying his expenses, particularly in case of eventualities like spending on severe illness and hospitalization. The same may be compared with depreciation of machinery by a business and depreciation of health by a salaried man where his / her only asset is his body. However, due to unknown reason one is deductible expense other is not.

 

 As said already  tax paid on salary income do not take any cognizance for the eventualities like medical treatment, which is nothing but the maintenance expenses of a earning machine called body.

 

 Given herewith a table of income and normal tax incidence for salaried person-

 

Considering however, the person do not have any potential to avail benefits under Sec 80-C of I.T.Act, due to his commitments and he has his parents / near relatives undergone severe health problem and spent Rs.800,000/- on hospitalization without having availment of any health insurance.

 

 

Description

Male

Female

Sr Citizen

Income

800,000

600,000

650,000

Exemption

160,000

190,000

240,000

Balance

640,000

410,000

360,000

I. Tax paid

94,000

48,000

38,000

Income after Tax

706000

552,000

562,000

Normal House exp

160,000

190,000

240,000

Balance

546,000

362,000

322000

Medical expenses

800,000

800,000

800,000

Loan to market

-254,000

-438,000

-478,000

 

The above calculation is based upon the fact that the exemption to an individual is provided by the govt to be just offsetting to maintain his family without any eventuality. (Hope the Govt also thinks alike).

 

 From the above example one can easily understand that in case one is blown by an unwanted and unsolicited medical illness for self or extended family, he is going to be ruined on want of any provisions in his hand. He and his family is now exposed to insecurity, which the nation committed to provide to each and every citizens of India.

 

 One can argue, one should have a health policy to protect his near and dears including family members. Unfortunately as per provisions of Insurance as the age advances premium goes high and every one knows that as on date to avail benefit under a health policy for a severe illness like kidney transplantation, Coronary bypass, Pacemaker etc it costs no less than some couple of lakh of rupees, which calls for steep premium and alas! Sec 80D under I.T.Act provides for only Rs.15,000/- p.a.

 

 This is also not the end of story, the Insurance company makes all sort of deductions, dis allowances, late payments, part payments due to the very fact that they operate by Third Party Arrangements and they are more interested in reducing the claim ratio than to protect the interest of insured.

 

 On top of that, all insurance companies has in the past segregated their risk, they are reluctant to provide insurance to senior citizens, and if they at all oblige by providing a policy they ensure there is no previous illness in the past 3 yrs. Or there be not any abnormalities in the normal clinical and / pathological / radiological investigations. If there is any the claim at the later date the same is subject to be rejected summarily. A close look of the senior citizen policies will revel a number of exclusions or capping for diseases, for example kidney stone, Renal complications, Cardio Vascular Diseases etc, which obviously an aging person is prone to. A serious question arises as to the objectivity of such health insurance policies. This is complete dis-respect to a senior citizen, who contributed in it’s own way to the nation building. What will happen to the now young when they also reach to such a stage ?

 

 Top of this, whenever insurance company reimburses any one, as a business model they get the money back by way of hiking the premium year after year, leaving a sufferer by extending his liability just deferred.

 

 On the other hand there are adequate policies of Govt for central Govt employees like CGHS, Defense, Railway etc however, the same also don’t come cheap, but the mass is still unprotected.

 

 What happens to persons employed in an unorganized sector, like mason, private driver, servants etc. leaving aside old parents having no income? Whether the guardian of such persons will be willing to bear hospitalization expenses for them? Obviously not, unless nation shares a bit by way of tax relief. 

 

 If one contributes to a temple or to a charitable organization he gets relief under Sec80G, but extending help by admitting one at the hospital to rescue him from suffering by spending one’s post tax money, has no recognition, strange!!!   Policy.

 

 Needless to say the Sec 80D of income tax is providing relief up to only Rs.15,000/- per annum to the assesses, which appear to be quite insufficient if someone goes for a health policy of a senior citizen along with his spouse and children. Is the govt promoting insurance company? or it is willing to extend the medical facilities to the needful ?

 

 We have to seriously think of the objectives of Sec 80D of I.T.Act.  Is it only for the young earners and for his spouse and children, while a senior citizen should be exposed to risk? and he should be put at the mercy ? Unless he is still earning and is in good health and can look after him self.

 

 It may be another debate if he is supposed to die, by indirectly refraining him from getting medication at a super specialty hospital and recourse to modern science.

 

 As a matter of fact the policy of govt discourages poor salaried man to spent money on hospitalization not only for his aging relatives but also for others as there is no provision for getting any tax relief for hospitalization expenses borne by an assesses. He is being forced to make a choice between his son/daughter and aging parents. If he helps one has to deprive the other, due to his limited resources.

 

 It is really surprising to see, one may contribute to any charity and get relief u/s 80G as per I.T. Act but not allowed to directly help one by spending money to hospital for him, in case one is ill and need fund to restore health.

 

I am sure, the economists will not object to the understanding as money is flowing back into the economy. In addition the due to increased hospitalization many an objective of the core nation’s policy shall be fulfilled i.e. –

 

1.     Medical field will get boosted by individual spending due to the obvious reason that one is encouraged to spend money on others due to tax deduction.

 

2.     A part of exchequers loss by govt due to tax deduction will be partially setoff by enhanced revenue generated by the hospitals.

 

3.     Governmental policy on health shall be widespread to all areas and unorganized / deprived will get hospitalization through individuals due to the fact that tax deduction granted, thereby disparity of income and spending at least the in health areas can be partially and judicially eradicated.

 

4.     It is also a matter of fact that intellect and productive souls may not have financial capabilities all the time, however loss f such soul is of immense loss to nation, and due to financial incapability they can’t afford right kind of treatment, hope the provision will encourage wealthy people to save such life which at a later date can contribute much to the nation.

 

It is therefore strongly urged that there be a separate and new provision for tax relief be granted by the government of India, to every individual salaried assesses in case of eventuality of hospitalization expenses for any individual including aging parents, which will encourage every national to extend his help in treating the unwell and ill at hospitals out of his taxable yearly income keeping intact the tax slab and / or any or all provisions under Sec 80C or Sec 80D of I.T Act.

 

Thanking you,

Yours truly,

 

Swajan Kumar Sen

 

Mech Engg, B.Com, AICWA, LL.B

 

Published in Income Tax
Source : No Source Specified
Views : 2652

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