Queries

Health Cover Unlikely After a Stroke

Ankur Kaul, Ludhiana

Last year, I suffered a stroke, and spent a lot on treatment. I am a teacher and was in the school when it happened. My school does not offer group health insurance. Is it not mandatory for employers to offer a health cover? I want to get cover for my entire family now. Could you suggest a good health insurance plan, given my medical condition?

Most companies do not give health insurance after a stroke. However, there are companies that may offer you health insurance excluding the pre-existing diseases (PED). However, you can buy health insurance cover for rest of the family members where you can be the proposer/payer for tax benefit purpose.

You can buy a family floater insurance policy covering each member for at least equal to 50 per cent of your annual income. It means if your annual income is Rs 12 lakh and there are three members in the family to cover, you require Rs 18 lakh cover (50 per cent of Rs 12 lakh × 3). You can visit various websites to compare the companies or connect with your financial planner to know policy options.

Giving health insurance to the employee depends on various criteria. It is at the discretion of the employer so you can enquire with them.

Hina Shah, CFPCM & Coach

Ramesh Pillai, Trichur

I have a house that I wanted to sell to buy another house. My old house is not yet sold, but I got a good property offer which I managed to secure by taking a home loan. Will the sale proceeds from my old house, whenever it is sold, be taxable as I don’t plan to buy more properties to invest the sale proceeds?

If a housing property is held for less than 24 months, it is considered a short-term capital asset. Gains made on selling such assets are short-term capital gains (STCG), and taxed as per the income slab. There are no exemptions available on STCG. If a housing property is held for more than 24 months, it is a long-term capital asset and gains from it are called long-term capital gains (LTCG). LTCG will be taxed at 20.8 per cent along with indexation benefits.

Section 54 of the Income-tax Act offers some relaxations, if you follow certain conditions. If you try and sell the old house within one year of the purchase of the new house, LTCG from it can be used to repay the home loan of the new house within one year of its purchase. However, the new house should be in the name of the old house seller. In case of buying an under-construction house, an additional condition is that the construction must be completed within three years of selling the previous housing property.

While computing LTCG, include stamp duty, registration charge, brokerage fee as well as repair and renovation expenses to increase the deduction limit. Note that the deduction is available only when the gain is not more than Rs 2 crore on property sale. The seller can claim this benefit only once in a lifetime.

If you sell the property within three years of its purchase, it will mean reversal of all tax benefits and gains treatment as STCG. If the house is sold within five years of the end of financial year when it was purchased, the tax benefits taken under Section 80C will be reversed and become taxable in the year of sale, but the interest payment deduction under Section 24B will remain untouched.

Under Section 54EC, exemption of LTCG from land and building sale is allowed if gains are reinvested in specified bonds issued by the Railway Finance Corporation, the National Highways Authority of India, the Rural Electrification Corporation, etc., within six months from the date of the sale. However, there is cap at Rs 50 lakh for this investment which comes with five years of lock-in. The maturity amount on these bonds is tax-free but interest is taxable.

You can reduce tax liability by setting off LTCG from house sale against long-term loss from other assets’ sale, including stocks and gold. LTCG can be adjusted with losses carried forward in the last eight years.

Uma S. Chander, CFPCM, Founder Handholding Financials