You’re battling a life-threatening illness, incurring massive medical bills that exceed your health insurance. On top of that, India’s New Tax Regime offers no relief for these out-of-pocket expenses. This “tax the healthy, not the helpless” approach is sparking a growing demand for change.
Thank you for reading this post, don't forget to subscribe!Under the current New Tax Regime, even with a high income, a significant portion of your earnings is taxed, with only a standard deduction available. If a medical emergency hits, like a cancer treatment costing ₹25 lakh with only ₹15 lakh covered by insurance, you’re left with a ₹10 lakh burden. Critically, there’s no provision to claim this amount as a tax deduction, even if it’s fully documented and medically necessary.
This is a deeply unfair situation, effectively punishing taxpayers for medical misfortune.
Tax experts and individuals are urging the Finance Ministry to amend the tax structure. One key proposal is to allow deductions of up to ₹10-15 lakh for expenses incurred above insurance limits for a defined list of critical illnesses. This could be life-saving for those affected, potentially preventing financial ruin. Safeguards like capping deductions and verifying insurance payouts could also be implemented to prevent misuse.
The call for this crucial change is resonating across social media, with people tagging Finance Minister Nirmala Sitharaman and the Ministry of Finance, pushing for a more compassionate approach to economic policy.
What the New Tax Regime Offers (and Omits)
Introduced to simplify income tax with lower rates, the New Tax Regime became the default from FY 2023-24. While it offers a streamlined process and updated income tax slabs (e.g., up to ₹3 lakh is NIL, above ₹15 lakh is 30%), it restricts most common deductions, including those for investments, insurance, rent, and notably, medical expenses. Taxpayers wanting to stick with the Old Tax Regime must proactively opt out each year.
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