| I am a pensioner. I invested Rs 20,000 in July this year in a single premium unit-linked insurance policy of the Life Insurance Corporation of India. The term of the policy is 10 years. Is the investment deductible from my gross annual income for tax purposes? If I surrender the policy after three years of lock-in, will the gain in the policy value be taxable? |
Soumitra Sen, Ashokenagar |
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| Unlike regular premium unit-linked policies, there is a catch in single premium plans so far as tax deductibility of the premium amount is concerned. How much of your single premium you can claim as deduction will depend on the sum assured of your policy. You have not mentioned what your sum assured is. Sub-section 3 of section 80C of the Income Tax Act states that the deduction is available up to a maximum of 20 per cent of the sum assured. If your sum assured is Rs 1,00,000, only then you can claim deduction on the entire Rs 20,000. |
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| On the withdrawal of the policy after three years you don’t have to pay any tax. The proceeds will be tax-free. |
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| Share trouble |
| I purchased 250 shares of Kitply Industries on December 12, 2005. Now the stock is not being traded on the BSE or on the NSE. How can I sell the shares? |
Shiv Kumar Losaka, Raniganj |
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| Trading in the scrip has been suspended by the bourse authorities with effect from September 2006 as the company has failed to justify its non-compliance with the provisions of the listing agreement and non-submission of secretarial audit report. Unless the company does not submit its audit report and comply with the listing norms of the stock exchanges, relisting won’t be allowed. You can sell the stock only when it is relisted. |
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| Security transaction tax |
| I sold some shares of a company through my demat account in May this year. How would I have to pay security transaction tax to avail of the capital gains tax exemption? |
Pratim Ghosh, Calcutta |
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| Capital gains tax on equities is exempted only if the shares are held for more than a year and the security transaction tax is paid. Since the tax is collected by bourses, one will have to sell/purchase shares through a recognised bourse. The exchange deducts the STT on sale/purchase of shares and you don’t have to pay it separately. |
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| If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001. |
