Money Today experts answer your personal finance queries, from taxation to investment and insurance.
Q. I donated Rs 50,000 this year to PM's Relief Fund and Rs 20,000 to an NGO. Can I claim tax benefits on these donations, and if yes, then how much? I also have a PPF account and a home loan. Will I still be eligible for tax benefits on NGO donations or will all these come under the same section? - SN Seth, Chennai
A. Yes, both donations can be claimed. While 100% deduction would be allowed for PM Relief Fund donation, it is 50% in case of an NGO. The total deduction for donation would also be limited to 10% of your total income. Neither of these donations will impact the deductions on the home loan or PPF account.
Q. I had purchased a flat in Ghaziabad, Uttar Pradesh, in February 2002. In December 2014, I made my final payment towards that loan and closed the loan account, for which the bank gave me a certificate to claim tax benefit. In January 2015, I again took a home loan and purchased a flat in Kolkata. I have also been issued a certificate by the bank to claim tax benefit. Since both transactions happened in 2014-2015, can I get both the benefits? - J Chatterjee, Delhi
A. Yes, the interest on home loan can be claimed if you have received its possession. However, one house will be treated as self-occupied, so the deduction will be limited to Rs 2 lakh for 2014-15 and second house would be deemed as rented if it is vacant during 2014-15. In case the house is rented, the interest deduction would be allowed on actual interest accrued during 2014-15, even if it exceeds Rs 2 lakh.
Q. My parents have just retired and wish to buy an insurance cover. They do not have any major pre-existing illness to report. Which companies provide covers for senior citizens? If I pay the premium for their cover, can I claim tax exemption? - Kunal Mallick, Kolkata
A. Most health insurance policies have a cap on entry age of 65 years and even the ones that do cover senior citizens do not provide comprehensive coverage and are often loaded with co-payments and sub limits. However, there are a few covers like Max Bupa Heartbeat and Health Companion which offer enrolment at any age and provide comprehensive coverage to all age groups, including senior citizens. You can claim tax rebate under Section 80(D) on health insurance if you are paying the premium for your dependent parents.
Q. I am a 32-year-old lawyer and until now, have depended on my employer for my health cover. I now plan to start a venture and wish to buy a cover. I am also planning to get married by the end of the year. Should I wait till I get married to buy a family floater policy or instead buy an individual cover immediately? Is it possible to convert an individual policy into a family floater policy? Also, I have had a clean record until now and never used the cover provided by my employer. Will that help me get a cheaper cover in future? - Diwakar Sharma, Gurgaon
A. It is important to have adequate insurance, given the rise in medical inflation and lifestyle diseases. It makes sense to buy a personal health cover at the earliest so that you can serve your waiting period when you are in the best of your health and utilise your policy when you need it. While choosing a health cover, opt for a plan that gives you maximum value in terms of comprehensive coverage for all your health needs. This includes hospitalisation or day-care procedures, lowest waiting periods, flexibility to cover your family members under one policy and a personalised hassle-free service. Since you are planning to get married, you can look at a family floater policy that will cover the spouse and also provide additional benefits like maternity and vaccination for the new born. In case you opt for an individual cover, it can be converted to a family floater and you can get your spouse added to the same policy. But your claim history with your employer provided cover would not help you get a cheaper personal cover. However, a personal health cover would provide you many more benefits and also make you eligible to claim tax rebate under Section 80(D).
Q. I and my wife have had individual health covers for the past ten years. We are expecting a child this year and would like to buy a cover for him/her too. Should we buy a separate cover for the child? If no, then how shall we look at combining our cover? My wife is a diabetic and as a result, her premium is higher than mine. In that case, will it make sense to buy a family cover? - Lokesh Anand, Jaipur
A. Yes, you may buy a separate individual cover for your child with either parent as the proposer and the child as the insured. A family floater plan is a more cost-effective option as it also covers maternity and offers an additional floater amount. However, in your case, we advise you to not discontinue your spouse's existing policy as she might lose out on the advantage of the waiting period that she has already served in the existing policy.
Q. I had invested Rs 1.4 lakh in a bank fixed deposit for two years. At the time of maturity, the bank deducted the tax at source without informing me and issued a certificate for the same. I am a homemaker and do not have any other income. I am not sure why I was taxed. What should I do now? - Sheela Varma, Cochin
A. You need to submit form 15H to the bank which discloses that you are not eligible for TDS as you do not have any other source of income. However, you will not be able to reverse the tax deducted at source and you can claim a refund on the same by filing a tax return for the financial year under consideration.
Q. I have a friend who was recently diagnosed with HIV. Although he has a health cover, the insurer has already said that they would not cover the issues arising out of his condition. Is there any cover for people who suffer from HIV? - RN Patel, Delhi
A. Unfortunately, HIV is not covered by most health insurers in the country and is listed as a permanent exclusion. Even the one or two products that do cover it offer a very small sum cover which is likely to be insufficient for the patient.
Q. I am a 32-year-old doctor and have a cover of Rs 25 lakh via three Ulips, which cost about Rs 50,000 per annum. I am aware that my cover is inadequate and the premium is too high. However, the three Ulips are into their sixth year. I am not sure if I should surrender these or continue with them and get another term plan. Also, given my age and my smoking habits, I am sure my premium for a cover of Rs 50 lakh will be high. What should I do? I have two kids and my wife, who is also a doctor, has a term plan of Rs 25 lakh. - Vishnu Pai, e-mail
A. There is no denying that your cover is inadequate. The fact that you smoke puts you at a greater risk and hence a term cover becomes more important. However, you still have age on your side. The thumb rule is a minimum cover of ten times your annual income; but please consult a financial advisor to arrive at your exact protection need. When you evaluate your financial plan, please take into consideration your wife's income, liabilities, etc and plan as a family. The other aspect of your question is whether you should surrender your Ulips or not. Ulips are for long-term savings, protection and achieving stage-based goals. I do not know the features of your policy and other details, but do keep in mind that you have two kids and you need to plan for their future as well, hence you must factor these before taking a decision.
Q. I have taken a term cover of Rs 25 lakh from LIC. My annual income is about Rs 4 lakh. I am planning to get married by early next year and my wife will also be buying a term plan. Should I wait to buy a combined cover or purchase a term plan at the earliest? - Bijoy Sen, Kolkata
A. The rule of the thumb says that your life cover should be at least ten times your annual income plus outstanding debts, so it is clear that your current life cover is inadequate. Since your marriage is a year away, you should enhance your term cover immediately and initiate a need analysis with a financial advisor after marriage as a family and jointly plan your finances.