Managing your money can be tricky. Send your queries, and top-notch industry leaders will help you resolve any issue.
Sumeet Arora: I bought a commercial office property in Delhi in 2000 and I have been using the same for business purpose. Now I want to sell it. Kindly let me know how long-term capital gains (LTCG) will be calculated and how I can save tax on it. Can I save tax if I do not invest the proceeds in another property?
Archit Gupta, Founder and CEO of ClearTax, replies:
You have held this property since 2000. Therefore, it will qualify as a long-term capital asset as you have held it for more than two years. Gains arising from the sale of this property will incur LTCG tax at 20 per cent with indexation. To calculate the actual capital gain from the property, you have to subtract the indexed cost of acquisition (ICOA) from the sale price. This is how ICOA is calculated: Actual cost of acquisition x Cost Inflation Index (CII) of the year of sale (FY2018/19)/CII of the year of purchase (FY2000/01).
You can save tax on LTCG by investing the gains in purchasing or constructing another house property. The time limit for the purchase is either one year before the sale or two years after the sale. In case of house property construction, the time limit is three years after the sale. This exemption is available under Section 54F.
If you do not want to buy/build another house property, you can still save tax by investing the gains in the bonds specified under Section 54EC of the Income Tax Act, 1961. It must be done within six months from the date of sale. However, such investments for any fiscal year is restricted to a maximum of `50 lakh. These bonds could be NHAI bonds or REC bonds, redeemable after five years.
Ajit Kumar: I have made two investments in equity mutual funds via SIP and I have opted for dividend reinvestment. I have heard that there is a new tax on dividend schemes. I do not require a regular income right now as I am saving for a goal which is seven years away. What should I do to save taxes?
Achin Goel, Head, Wealth Management and Financial Planning, Bonanza Portfolio, replies:
Yes, you are right. A dividend distribution tax of 10 per cent is now charged on equity MF. As you do not require a regular income, you should stop the dividend schemes and start new SIPs in growth options.
Surrender Kohli: My wife and I have health insurance covers from our respective employers. She has a cover worth `50,000 and I have a `40,000 insurance policy. My spouse is now pregnant. Can we claim maternity expenses from both insurers?
Mahavir Chopra, Director, Health, Life and Strategic Initiatives, Coverfox.com, replies:
In case of health insurance, a policyholder is allowed to make use of the sum assured from two or more policies whether the policies are from the same company or different insurers. One could be a group insurance policy offered by the employer and the other one could be his/her personal policy. If the claim amount is greater than the sum assured under one policy, the insured can utilise other policies to raise the claim amount.
For instance, if a person has two policies of `2,00,000 each from insurer A and B, and he has a claim running up to `3,00,000, he can claim `2,00,000 from either by submitting all original documents. Then he should procure a settlement certificate from the insurer who has paid the entire sum assured and claim the balance from the second by submitting photocopies of the claim documents.
Sadly, the same does not hold good for maternity expenses. The reason: The maximum maternity benefit is capped at around `50,000 for caesarean delivery and around `30,000 for normal delivery, which can be covered by one or multiple policies. If you try to raise the claim from both insurers, they will invoke the condition of contribution, which means sharing the claim amount in proportion to the sums insured under their respective policies and ensuring that the total payable amount does not exceed the maximum limit.
The best possible solution is to contact both insurers and ask what is the maximum maternity benefit paid by them. After that, you can place your claim with the insurer providing the maximum benefit depending on your requirement (normal or caesarean delivery).
Shashi Shekhar: I am 28 and recently got married. My wife is also working. Should I buy life insurance for her against my life although she is not financially dependent on me?
Brijesh Parnami, Executive Director and CEO, Essel Wealth Services, replies:
It is a wise thought to have both partners covered under term plans. Ideally, all working people should have term plans as they not only provide financial security in case of any unfortunate event but also take care of liabilities. When selecting a term plan, the premium payable should not be the only criterion. Check the claim process and the settlement ratio of each life insurer before you finalise on one. It is easy to buy a suitable plan as term plans are now available online. You can try HDFC Life Click 2 Protect or ICICI Prudential Term Insurance Plans for this purpose.