Taxation: Homi Mistry

I spent Rs 30,000 on my wife’s post-pregnancy treatment in April last year. Since health insurance policies do not cover medical expenses during pregnancy, I could not claim anything. Can I claim deduction under Section 80DDB for such expenses?
Deduction under Section 80DDB of the Income Tax Act can be claimed if the amount is spent on medical treatment of certain diseases or ailments, as specified in Rule 11DD for self/dependants. However, medical expenses on pregnancy and post-pregnancy are not covered, and hence, you cannot claim a deduction.

I incurred a capital loss of Rs 50,000 this year. Simultaneously, certain purchases were not delivered to my account and the exchange auctioned those shares. This led to a gain of Rs 40,000. Will this be treated as capital gain and set off against the loss, or do I have to pay tax separately?
The gain of Rs 40,000 will not be treated as capital gain, as a contract for purchase or sale of any share settled otherwise than by actual delivery is treated as a speculative transaction. Short-term capital loss can be set off against either short-term or long-term capital gain.

However, long-term capital loss can be set off against gain from any other long-term capital asset. Accordingly, you will not be able to set off capital loss against the speculative gain of Rs 40,000, and you need to pay tax on the speculative gain without considering the setting off of capital loss.

According to my father’s will, I received Rs 5 lakh after his death. I invested the money in fixed deposits and mutual fund schemes. I will receive Rs 40,000 this year as interest income from bank deposits. I have already started receiving dividends from the mutual fund schemes. I am a housewife and have no other source of income. Am I required to file tax returns for this income?
According to income tax provisions, any sum of money received under a will or by way of inheritance is not regarded as income. However, income earned thereon may be taxable. Income arising from investments made in mutual fund units shall be exempted from tax under Section 10(35), but interest earned from bank deposits will be taxable. Since you do not have any other source of income and taxable income comprises only the interest income of Rs 40,000 from your bank fixed deposits, which is less than the maximum amount not chargeable to income tax (Rs 1.9 lakh in case of a resident woman less than 65 years), you are not required to file your income return.

I purchased two unit-linked insurance plans (Ulips) a week before. I am paying a premium of Rs 25,000 in this financial year. Also, I bought a health insurance policy for my parents (premium = Rs 30,000). How much deduction am I eligible for on the back of these purchases? Under what sections can I claim these? Is it separate for Ulips and health insurance?
Deduction for Ulips are covered under Section 80C of the Income Tax Act, while health insurance premium is under Section 80D. The maximum deduction available under Section 80C is Rs 1 lakh and under Section 80D is Rs 15,000 for health insurance premiums paid for parents (Rs 20,000 for a parent who is a senior citizen).

Hence, you will be able to claim a deduction under Section 80C for the entire amount of Rs 25,000 paid towards Ulips. But the deduction under Section 80D will be restricted to Rs 15,000 (or Rs 20,000 as the case may be).

The writer is a tax partner at Deloitte, Haskins & Sells. Views expressed are his own. Send your queries to yourmoney@bsmail.in