Medical reimbursement not taxable

SC Vasudeva

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Q. I want to know as to how to treat reimbursement of hospitalisation expenses regarding my wife (age 85 years) (amount Rs 53,291) against bill of Rs 62,692 during FY 2018-19  for I-T return for the AY 2019-20. I am 90+ and retired from Department of Telecom in 1986. The treatment was done in a private hospital GTBS(c) Hospital, Ludhiana, from 5.4.2018 to 19.4.2018 and the amount was reimbursed on 26.9.2018. I had paid CGHS contribution of Rs 16,120 on 10.10.2018. Clarify whether this amount of reimbursement is taxable or not. If yes, how it will be treated? — Joginder Singh

It is presumed that the reimbursement was made by the CGHS. If this presumption is correct, the reimbursement so made would not be taxable.

Q. I am a senior citizen aged 86 years. I want to donate money to AIIMS Delhi or PGI Chandigarh under Poor Patient Relief Fund under I-T Act sub clause iii(f) of Section 80G(2). I understand there is some deduction on such donation in income tax. Please intimate how much percentage is allowable (i.e. 100% or 50%) so that I can file my income-tax return accordingly. — DK Verma

Any donations paid under sub-clause (iiif) of Section 80G(2) of the Income-tax Act, 1961 (The Act) would be covered for 100% deduction provided it has been paid to a university or any educational institution of national eminence as may be approved by the prescribed authority in this behalf. Therefore, before any donation is given to AIIMS Delhi or PGI Chandigarh, it would be advisable for you to obtain a certificate that the institution to which the donation is being given is duly approved in accordance with the provisions quoted above. In case such a certificate is available, you will be able to claim deduction of the entire amount from your total income. However, in case the institution to which donation is being given is not covered within the above provisions, you would be entitled to a deduction to an extent of 50 per cent of the amount paid as donation.  

Q. Kindly intimate how much deductions are admissible for the assessment year 2019-20. I have an income from pension and bank interest and am a senior citizen. Clarify on the following points:

i) Deduction from pension

ii) Deduction from bank FDRs (80TTA/80TTB)

How much rebate is admissible u/s 87A? — Vikas Kumar

(a) A sum of Rs 40,000 is allowable as standard deduction from pension received from a former employer and is taxable under the head ‘Salary’.

(b) Another Rs 50,000 is deductible from interest earned from post office and bank.

(c) The rebate admissible under Section 87A for assessment year 2019-20 is Rs 2,500 provided the total income does not exceed Rs 3,50,000.

Q. I have sold a plot which I bought five years ago at almost the same price. I have gifted that money to my mother to buy a property. Will there be any tax liability? — Manjit Singh

You have not mentioned in the query whether the sale of the plot has been effected at a price equivalent to or higher than the value at which stamp duty has been paid at the time of execution and registration of the sale deed. In case the sale price is lower than the value at which stamp duty has been paid for registration of the sale deed, the amount of capital gain arising on such sale will be computed with reference to the value on which stamp duty has been paid. Tax issue would arise in such a case as the amount of capital gain would be chargeable to tax @20% plus cess of 4% thereon.

The amount of capital gain will be computed by taking into consideration the cost increased by the inflation index applicable for the year for which the plot was held by you. The amount so arrived at shall be deducted from the sale consideration or the assessable value under the provisions of the Stamp Duty Act applicable to the state in which the plot is situated in case the same is higher than the sale consideration. The balance would represent the amount of long-term capital gain. No tax is payable on the amount gifted by you to your mother.