My mother was hospitalized and passed away in March 2018. I had a corporate health insurance but not able to use it for cashless facility as the hospital was not a network hospital. The Bills were settled by my father. I raised a claim and got the claim amount from Future generali (approximately 2.5L). I have 2 questions, (1) whether this Health insurance claim amount is taxable, (2) If it is taxable whether I need to show this in Income from other sources or if it is not taxable can I show it in exempt income in ITR 1.
There is no express provisions on taxability of proceeds received under a health insurance policy. However, there is a prevailing view that the claim settlement received by you may not to be treated as taxable, being a reimbursement of medical expenses incurred by you.
Regarding the payments received under the corporate policy for loss of pay, there is a school of thought that the same should be taxable.