Tax deduction for mediclaim premium is on payment basis

My wife and I are senior citizens. I pay for the health insurance policies for both of us. Are we both entitled to an income-tax exemption individually?

—Suresh Mitra

An individual can claim deduction for the payment of health insurance premium, as per the conditions prescribed in the tax law. The deduction for health insurance premium is available on payment basis, and accordingly, the individual making the payment can claim deduction for it. Deduction can be claimed for the payment made by an individual for self, spouse and dependent children. For you, since you are paying on behalf of your spouse, the deduction shall be available to you subject to the prescribed limits.

The deduction in case of senior citizens (resident individual of 60 years or more) is available to the extent of Rs.30,000 for the financial year. But it is available only if the amount is paid by a mode other than cash.

An individual can also claim deduction for an amount paid towards preventive health checkups up to Rs.5,000. However, the overall deduction is restricted to Rs.30,000. A resident of 80 years or more and who has not paid any amount for health insurance premium can claim deduction for an amount of up to Rs.30,000 paid for medical expenses.

I will get possession of a flat in two years. Can I claim tax benefit on the interest that I pay on the home loan now?

—Sunita Singh

We assume the property is under-construction. Accordingly, you can claim tax benefit in respect of interest on the home loan availed only once the construction of the property is completed. The interest paid for the period prior to the financial year (FY) in which the construction is completed shall be deductible in five equal annual instalments commencing from the FY in which the construction of the property has been completed.

The amount of tax benefit in the form of deduction towards interest on home loan depends upon whether the respective house against which home loan is availed is a self-occupied property (SOP) or a let-out property (LOP) or deemed to be a let-out property (DLOP). When an individual owns more than one house, any one house at her discretion is considered as SOP and the other, even if not let out, will be DLOP. If the house property is considered as either LOP or DLOP, the entire interest paid on the home loan (including one-fifth of pre-construction interest) can be claimed as deduction from the net rental value or the deemed rental value computed as per the domestic tax law. If the house is SOP, the deduction towards interest paid is subject to a limit of Rs.2 lakh.

Accordingly, the deduction towards aggregate interest (including one-fifth of pre-construction interest), subject to the limits specified under the law, could be claimed from the FY in which the construction of the property is completed.

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Source : Livemint