UTI will scrap the Senior Citizen Unit Scheme (UTI-SCUP), which was introduced in 1993, from 18 February and instead offer an alternative health cover plan from New India Assurance Co. Ltd (NIAC) to unitholders aged 58 or more.
For members who are more than 58 years, and whose insurance premium had been paid out of existing investment, there will be no change and NIAC will still offer the hospitalization cover.
UTI-SCUP was introduced by the former Unit Trust of India (UTI) in collaboration with NIAC to cover hospitalization for members after they completed 58 years. The alternative policy will now give a special 30% discount on premium and will provide a cover of Rs1.5 lakh to UTI Senior Citizen Unit Scheme investors. All pre-existing conditions will be covered and investors will not have to go for health checks before signing up for the alternative policy.
But there’s a catch: It will be valid only for a period of one year. Investors who want to take up the new medical policy will have to fill the option letter and send it to the asset management company’s office.
‘Trust’ may reduce your tax bill
You might be aware that investments made on the name of your minor child get clubbed with your income. But a bit of tax planning can save you from the provision under section 64 of the Income-tax (I-T) Act, 1961.
According to the clauses of section 64 of the I-T Act, 1961, the income of a minor child, from investments among other things, could be included with the income of the father or mother, as the case may be. However, you can set up a trust for a minor child and then the income cannot be included in the total income of the assessee. But the income may not be tapped while the child is still a minor. A ‘trust’ is an agreement by which a person (a trustee) owns a piece of property as its nominal owner for the benefit of one or more beneficiary.
The Orissa high court, in the case of the commissioner of income tax vs Shri Abhayananda Rath Family Benefit Trust, issued a judgement that deferred benefits during the period when the child was still a minor from a trust.
The judgement is a landmark one for tax planning. The trust money can be given to the person on adulthood and that monetary benefit may not be included in the total income of the assessee.
The meat of the law is to ensure that the immediate or deferred benefit of a trust should be for the benefit of a minor. (Teena Jain)