“Synopsis”
Many NRIs (Non-Resident Indians) continue to support family members back in India, especially when it comes to medical expenses. But can NRIs claim tax deductions under Section 80D for health insurance premiums paid for their family in India? And what should they be aware of while continuing or buying a health policy? This blog explains the tax implications, legal compliance, and best practices for NRIs investing in Indian health insurance.
Can NRIs Buy Health Insurance in India?
Yes, NRIs can purchase health insurance in India either for themselves (if visiting often or planning to return) or for family members like parents, spouse, or children. Most major Indian insurers allow NRIs to buy policies online, using NRO or NRE accounts. Policies are governed by IRDAI and come with similar benefits as those available to resident Indians.
Can NRIs Claim Section 80D Deductions?
Yes, NRIs who have taxable income in India can claim Section 80D deductions for health insurance premiums if:
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The policy is in the name of self, spouse, dependent children, or parents.
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The premium is paid through an Indian bank account (NRO/NRE), and not from an overseas account.
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The payment is made in any mode other than cash.
Deduction Limits under Section 80D:
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Up to ₹25,000 for self, spouse, and children.
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Additional ₹25,000 for parents (₹50,000 if parents are senior citizens).
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₹5,000 is allowed for preventive health check-ups (within the above limits).
These deductions can significantly reduce the taxable income of an NRI who files income tax returns in India.
Common Mistakes NRIs Make with Health Insurance in India
1. Paying Premiums from a Foreign Account
Many NRIs make the mistake of paying insurance premiums from a foreign account. However, for the purpose of claiming Section 80D, payment must be made from an Indian bank account. Otherwise, the deduction is disallowed.
2. Not Informing the Insurer About NRI Status
If you continue an existing policy after becoming an NRI, it’s mandatory to inform the insurer about the change in residential status. Non-disclosure may lead to claim rejections later due to underwriting restrictions.
3. Letting Policy Lapse During Stay Abroad
Due to oversight or a temporary move abroad, NRIs sometimes forget to renew policies. This leads to a break in coverage, loss of no-claim bonuses, and waiting periods being reset.
4. Relying Solely on Employer Health Cover Overseas
While many NRIs have company-provided health cover in foreign countries, it doesn’t help if parents or family in India need medical treatment. Also, employer coverage is usually terminated if the job ends.
5. Assuming Global Coverage Without Reading the Fine Print
Many Indian health insurance policies don’t provide international coverage unless explicitly mentioned. NRIs should ensure they buy add-on global coverage or plan accordingly.
6. Not Filing Income Tax Return in India
If an NRI has taxable income in India but doesn’t file returns, they lose the opportunity to claim deductions under Section 80D—even if they paid eligible premiums.
Should NRIs Continue or Start a Health Policy in India?
Absolutely. Especially if:
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Your parents or dependents live in India.
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You plan to return to India in the future.
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You want to take advantage of tax deductions.
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You want affordable premiums and cumulative benefits.
Indian health insurance provides value in terms of cost, network hospital access, and ease of managing renewals digitally.
Conclusion
Health insurance is not just a safety net—it’s also a smart financial move for NRIs with ties to India. As long as you have taxable income in India and the premium is paid via a valid Indian account, you can claim deductions under Section 80D. More importantly, keeping your family medically secure in India is a long-term commitment. Avoid the common mistakes, disclose your residency status to insurers, and consult a tax advisor if needed.
