| I am 86 years old and my only source of income is pension. My ex-employer granted to me from January this year a medical allowance of Rs 25,000 per annum. This, when added to my total pension income, will attract income tax. I have a five-year fixed deposit of Rs 1 lakh in a nationalised bank. I have no mediclaim insurance? Can I claim deduction of Rs 20,000 under Section 80D of Income Tax Act? |
S.D. Ghosh, Salt Lake, Calcutta |
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| It should be made clear that 'medical allowance' is fully taxable in the hands of employee irrespective of expenditure incurred. But 'medical reimbursement' up to Rs 15,000 can be claimed exempt from tax. Medical reimbursement above Rs 15,000 a year is taxable in the hands of employee. Thus, if your employer has given you medical allowance, you cannot claim tax deduction on the same under Section 80D. |
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| Capital gains |
| I am 70 years old. In 2007, I had invested Rs 1 lakh in a HDFC FMP that matured on June 22, this year. The maturity amount is Rs 1,13,018. What will be my capital gains tax by indexing two financial years 2008-09 and 2009-10? If my total income in financial year 2008-09 is Rs 3 lakh and I invested Rs 1 lakh under Section 80C, can the FMP capital gains be adjusted? Am I to pay the capital gains tax for FMP? |
N. Mandal, Uttarpara, Hooghly |
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| You didn't mention the month of your investment in the FMP. If you had invested the money between January and March 2007, you in fact can avail of the indexation benefits for two financial years. If you had invested the money between April and December 2007, you can take the benefit only for one financial year. Your capital gains and tax liability thereon will be calculated as follows: |
| Cost of purchase = Rs 1,00,000; |
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| Sale proceeds = Rs 1,13,018; |
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| Cost inflation index for 2006-07 (year of purchase) = 519 (supposing you invested between January and March 2007) |
| Cost inflation index for 2008-09 (year of sale) = 582 |
| Indexed cost of purchase = Rs 1,12,138.73 |
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| Capital gains = Rs 879.27 |
| Capital gains tax = Rs 181.13 |
| The long-term capital gains can be adjusted only against long-term capital loss. You have to pay a capital gains tax of Rs 181.13. |
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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. |
