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What is Pradhan Mantri Vaya Vandana Yojana? Answers to your personal finance queries

Real estate agent offer house. Property insurance and security concept.

Real estate agent offer house. Property insurance and security concept.   | Photo Credit: Getty Images/iStockphoto

Q. During the interim Budget in February , the Finance Minister relaxed long-term capital gains tax norms whereby one could invest in two residential properties from the proceeds of sale of a house. I want to know 1) If the two houses must be in the same town or can be in different towns 2) one house can be in a town and another new construction in another town 3) Both from new construction.

Kamaludeen M

A. A one-time exemption for individuals and HUF was announced in the Interim Budget in February 2018 and later brought into force. With effect from April 1,2019, if the long term capital gains (after indexation) from sale of house property does not exceed ₹2 crore, the assessee may, at his option, purchase or construct two residential houses in India.

1.It is provided that the residential property be situated in India, hence, it can be situated in the same town or different town as long as it is situated in India

2. One residential house can be purchased in one town and one constructed in another town as long as both the towns are situated in India

3. Both the residential houses can be constructed or both can be purchased at the option of the assessee

4. It is to be noted that this option of purchasing or constructing two residential houses is a one-time option and cannot be exercised in any other year.

Q. I am a senior citizen and would like to open an account in the PMVVY pension scheme soon. I would like to know while filing ITR 1, where the interest or pension income out of the above scheme should find its place?

R. Kesavan

A. Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a social security scheme launched by the government through LIC of India. It is in the nature of an annuity scheme wherein a subscriber is required to pay a lump sum premium amount on subscription.

The scheme pays out to the subscriber on a monthly basis based on the initial contribution.

Annuity scheme payouts are in the nature of pension; however, these do not pertain to any employee-employer related pension thereby not warranting disclosure under “Income from Salaries.”

Hence, income in the nature of pension from PMVVY is to be declared as “Income from Other Sources” in ITR 1 or any other ITR applicable to the assessee.

Q. Sir, I am a retired defence person. My monthly pension is ₹38,000 and my total annual income for FY 2018-19 is ₹4,55,088. The interest from fixed deposits for the FY 2018-19 is ₹1,48,085. Am I eligible to get exemption from tax on the interest arising from fixed deposits, as a senior citizen?

Kulwinder Singh

A. Fixed deposit interest is deductible for senior citizens up to ₹50,000.

It is to be noted that this threshold limit is applicable for savings bank account interest also. In your case, out of the ₹1,48,085, ₹50,000 will be deducted and the remaining portion is considered as your taxable income.

You will have to disclose the said sum in your ITR 1 and the same shall be auto-considered by the return filing tool for computation of your net taxable income.

(N. Sree Kanth is partner, GSS & Associates, Chartered Accountants, Chennai)

Q. I am 35 years old and a Kerala State government employee. I haven't taken any health insurance policy yet. I am single and live with my mother. Two months ago, I had to undergo a myomectomy and the expense came to around ₹1.25 lakh. I have no other health issues.

Now, I am thinking of taking a health insurance policy, though I know it's already late. When I consulted an insurance company official, he told me that I can start claiming the policy just after the completion of one month after I apply. Is it possible?

1) Can you suggest a health insurance policy that is suitable for me, that can give coverage to my uterus-related issues?

2) Is it better to take a family health insurance, adding my mother also or to take two individual policies? My mother is a senior citizen.

3) Which policy would be better for me in terms of waiting period and incurred claim ratio?

Sreeja Sreedharan

A. No, it’s not too late to take a health insurance policy. A new hospitalisation policy will admit claims after a 30-day waiting period (except if hospitalisation is due to an accident), but pre-existing conditions, like your fibroids and their removal, will be covered only after a specified waiting period, usually three to four years.

There are also waiting periods for various specified conditions and procedures even if not pre-existing. Please read the policy prospectus closely as these vary by company and policy.

Opt for a sum insured (SI) of ₹3 to ₹5 lakh. You can add your mother to the policy and get a family discount! Floater or individual SI are options, each with pros and cons.

If your mother is a tax assessee, then she can buy a separate policy to avail of income tax rebate under Section 80D. If you pay her premium, you get a higher rebate.

Incurred claims ratio is an internal business metric for insurance companies.

Perhaps you mean claims settlement ratio which indeed indicates the company’s customer service levels, a higher ratio meaning a more customer- friendly company.

Q. My husband and I are senior citizens and have been covered under our bank’s group health insurance policy for over a decade.

Last year, the bank wrote to us saying they are discontinuing the policy and suggested that we should port our policies out.

The insurance company we approached has refused to port my husband’s policy and we have bought a new hospitalisation policy for him.

In my case, they quoted a premium for porting and encashed my cheque. Then, when the medical examination revealed a fibroid in my uterus, they rejected my porting request.

At the same time, I have received a letter from them asking if I have symptoms or am undergoing any treatment and so on.

What should I make of this and what do I do for coverage?

Kamala Shettigar

A. The situation certainly is contradictory! Was the porting request rejected in writing? If not, then the letter asking for clarifications may be the document to go by as they may want to know your current health status for issuing the policy.

Please do provide them factual replies to their queries and ask them in writing about your porting request status pointing out that your premium cheque has been encashed.

Also point out the fact of your earlier policy expiry date and stress that their early decision is imperative or you will lose unbroken medical coverage creating hardship for you.

They should issue the policy or refund your premium. If you are unhappy with their response, take it up with their grievance redressal official in writing.

If they reject your porting, hurry and buy a new policy in your own interest.

(The writer is a business journalist specialising in insurance & corporate history)

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Printable version | Mar 30, 2020 12:19:07 PM | https://www.thehindu.com/business/taking-a-suitable-health-policy/article29310566.ece

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