Summary of this article
Parents cannot claim deduction for married independent sons insurance
Health insurance premiums can be routed through HUF account
Inherited shares get deemed cost of acquisition tax benefits
My wife and I are senior citizens. I have paid Rs. 55,000/- for a health insurance policy for both of us last year. My wife has paid Rs. 24,500/- for a health insurance policy bought for my son’s family. How much deduction can my wife and I claim for the health insurance premium paid? I also have an HUF.
An individual can claim the deduction under Section 80D in respect of health insurance premium paid for himself, spouse, dependent children and parents, whether financially dependent or not. An HUF can claim the deduction for the premium paid for any member of the HUF. This deduction is available only under the old tax regime.
The deduction is available up to Rs. 25,000/- to an individual for premiums paid for the family. One can also claim an additional deduction of twenty-five thousand rupees for parents’ health insurance premiums paid. In case the person for whom the premium is paid is a senior citizen, a higher deduction of fifty thousand rupees is available.
Since your son is not financially dependent on you, your wife cannot claim the deduction in respect of the health insurance premium paid for his family. However, as you have an HUF, your wife can instead pay the premium for your son’s family from the HUF’s account and claim a deduction for Rs. 24,500/- as all the persons in your son’s family are members of your HUF.
However, in case you or your HUF does not have enough taxable income, your son can pay for his family as well as for both of you and claim a deduction for Rs. 74,500/- (50,000+24,500) under Section 80D in his ITR under the old tax regime.
I had inherited a few listed shares long back, and they are lying in my demat account. I have sold all these shares over the last year. As my cost is zero, do I have to pay tax on the full amount realised as my capital gains?
No, the full value of the sale proceeds will not be taxed as your capital gains in your hands. Even though your cost of acquisition for inherited shares is nil, you will still get a deduction for your deemed cost of acquisition. For the computation of capital gains, the deemed cost of acquisition for the seller in case of assets received as a gift or inheritance is the cost of the previous owner, who had actually paid for it. As the total holding period of you, as well as from the previous owner who had paid for it, is more than 12 months, the profits on the sale of such shares shall be treated as long-term capital gains. If you sell the shares through a stockbroker on the platform of a stock exchange in India on which Securities Transaction Tax (STT) is paid, the profits made on such sale will get taxed at a flat rate of 12.50 per cent over Rs. 1.25 lakhs, which is taxed at zero rate. The long-term capital gains of Rs. 1.25 lakhs, which are taxed at zero rate, are the aggregate long-term capital gains on the sale of all listed shares and equity-oriented schemes taken together.
In case of an asset acquired prior to 1st April 2001, the fair market value on 1st April 2001 can be taken as the cost of acquisition for the purpose of computing long-term capital gains. In case of listed shares acquired before 1st February and on which STT has been paid, you get the benefit of grandfathering under which the market price of the shares on 31st January 2018 is to be taken as the cost of acquisition if it is higher than your deemed cost of acquisition. So if the shares were acquired by your father before 1st February 2018, you can take the closing market price on 31st January 2018 as your cost.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
