MEDICAL REIMBURSEMENT IS ELIGIBLE FOR TAX BENEFIT

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TAX BENEFIT

Query 1]

Sir, I am a Central Govt. Employee. My Father & mother both are diabetic patient. Since I am a Government employee, I am getting the medical reimbursement of my parents. I had already spent Rs. 50,000/- towards the medical treatment of my parents & same amount had been reimbursed by the company where I am working. My questions are

  1. Is the amount which is credited in my bank account by my company towards the medical reimbursement is taxable? If yes, then how can we save this tax? Whether deduction is admissible u/s 80DDB?
  2. Around Rs. 2,400/- per month is deducted from my salary toward my provident Fund & same amount is deposited by my company in my provident fund A/c. That is, total Rs. 4,800/- is being deposited in my Provident fund. Is this saving is taken into account in the one lake tax saving slab? [Sheikh Jameeluddin, Chandrapur]

Opinion:

 

  1. (a) The deduction u/s 80DDB is available if the expenses for the medical treatment of specified disease or ailment is incurred by assessee on himself or on dependant. The specified disease for the purpose of section 80DDB is prescribed in Rule 11DD as under:
    (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :
    (i) Neurological Diseases where the disability level has been certified to be of 40% and above,—
    (a) Dementia ;
    (b) Dystonia Musculorum Deformans ;
    (c) Motor Neuron Disease ;
    (d) Ataxia ;
    (e) Chorea ;
    (f) Hemiballismus ;
    (g) Aphasia ;
    (h) Parkinsons Disease ;
    (ii) Malignant Cancers;
    (iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
    (iv) Chronic Renal failure ;
    (v) Hematological disorders :
    (i) Hemophilia ;
    (ii) Thalassaemia.
    Diabetes is not covered under Rule 11DD and so deduction cannot be claimed u/s 80DD.
    (b) It may be noted that reimbursement of medical expenses by the employer to the employee up to Rs. 15,000/- is exempt from income tax. Amount received over and above Rs. 15,000/- shall be taxable as Salary Income.
  2. The saving (both, employer & employee contribution) by way of deposit in the employee provident fund account is eligible for deduction u/s 80C. The same is to be includ in the amount of Rs. 1 Lacs eligible for deduction.

Query 2]

Under the UTI scheme Unit Linked Insurance Plan 1971 I started investing from 1998 Rs. 7,500/- every year for 10 years. The ULIP ended in 2008 and in the year 2009 I received maturity amount of Rs. 1,04,000/- at existing NAV. The difference of profit (1,04,000/-  – 75,000/- ) comes to Rs. 29,000/- My CA told me that I have to pay long term capital gain tax on it. Is this correct? I have learnt that the maturity proceeds of ULIP is exempt from any kind of tax. [dhananjay1989@gmail.com]

Opinion:

UTI- ULIP-1971 is not an equity-based mutual fund but UTI’s ULIP is a debt-based instrument. Therefore, the capital gains will have to be take on year to year basis and the rate payable will be 10 per cent without indexation or 20% with indexation, whichever is more beneficial to the investor.

 

Query 3]

We have decided to take a house loan jointly in names of myself and my son who has already availed a house loan from Bank and claiming the deduction as per Income Tax Act. In the new house, the first name will be of my son.  Now I want to know whether I can take the tax benefit against the proposed house Loan.

Please Advice in the matter. [mskakde@gmail.com]

Opinion:

Presuming that you have an actual share in the house property to be purchase in the joint name (i.e., your name is not includ in the sale deed for the sake of convenience) AND the property accounting treatment is given in the books of accounts / Records for the purchase & borrowing transactions,
i) you can claim deduction u/s 80C in respect of principal repayment &
ii) u/s 24(b) in respect of interest payment. The deduction will be in the ratio of your share in the housing loan.

TAX BENEFIT

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