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Q: I am a senior citizen drawing a Central civil pension. I am a Central Government Health Scheme (CGHS) beneficiary. Am I entitled to deduction of Rs 50,000 from my income for medical expenses incurred during the assessment year 2019-20? I am occasionally spending money from my pocket for medical treatment (from private practitioners). - T Lall
A You are entitled to claim a deduction in respect of any contribution made to the CGHS to the extent of Rs 50,000 for the assessment year 2019-20. Apart from the said amount, no other deduction is admissible under Section 80D of the Act.
Q: I am a senior citizen of 86 years. I was allotted a plot by HUDA in 2004 and I have paid Rs 12.5 lakh in instalments up to March, 2012. I have got this amount indexed from a CA up to March, 2018 which comes out to be Rs 24.5 lakh. Besides, I have paid Rs 60,000 as extension fee up to March, 2018. I have got a buyer who is ready to pay me Rs 1.5 crore (white money) for the plot. What will be the long-term/short-term gains in my case? How much tax I need to pay if I want to utilise the gain amount to buy a commercial property? Can I demolish my old house and construct a new one from the gains? Can I give the long/short-term gains to my son to build or buy a house? I have been told by my CA that if I deposit the balance amount (after construction) or whole of Rs 1.5 crore in the bank for three years with an interest of 9.5 per cent, I won't have to pay any tax. Is there any limit that how much amount (of the gains) can be deposited in the bank? - JK Jain
(a) The amount of long-term capital gains on the basis of figure indicated in the query would be Rs 1,24,90,000.
(b) You will be liable to pay tax at 23.92 per cent. The amount of tax works out to be Rs 29, 87, 608. No exemption is allowed in case the amount of long-term capital gains is utilised for buying a commercial property. The above tax has been computed on the presumption that your other income is more than Rs 5,00,000.
(c) You can construct a new house after demolition of the old house. However, to save tax on the amount of capital gains you will have to spend the entire consideration of Rs 1.5 crore towards the construction of a residential house and such construction should be completed within three years after the date of the sale.
(d) A gift of the amount of the long-term capital gains will not enable you to save tax on the amount of such capital gains.
(e) No such provision exists in the Act which coincides with your CA's advice. However, in case the entire amount of consideration is deposited with a bank in a capital gain scheme account before the date of filing of the tax return in respect of the assessment year in which the capital gain arose for being utilised for construction of a residential house, the amount of long-term capital gains would not be taxable in the said assessment year. The amount so deposited has to be utilised for the construction of a residential house within the period specified hereinabove. In case the amount so deposited is not utilised for the construction of the house within the stipulated period, the amount of long-term capital gains would be taxable in the assessment year in which the stipulated period permissible for the construction of the house expires.
A The above computations have been made on the basis of the index notified for financial year 2018-19. In case the sale takes place after March 2019, there would be change in the cost inflation index cost for the financial year 2019-20 and the aforesaid figure of indexed cost will have to be modified in accordance therewith.
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