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Photo: iStock
Photo: iStock

Senior citizens can avail of tax benefit of up to 50,000 for medical expenditure

If you choose to be governed by the new tax regime under Section 115BAC of the Act, the said deduction under Section 80D won’t be available

I am 70 years old and I bought a hearing aid for 70,000 during this financial year. I do not have any health insurance. Am I eligible for a deduction of 50,000 under Section 80D of the Income-tax Act?

—Mohinder Bhatnagar

As a senior citizen, if any payments are made by you towards medical expenditure, through any mode other than cash, a deduction of up to 50,000 per annum is available under Section 80D, as you do not have any health insurance.

However, as medical expenditure has not been expressly defined, admission of these payments towards this deduction would be a fact-specific evaluation.

It is advisable to maintain receipts or documents of the payments to support your claim. If you choose to be governed by the new tax regime under Section 115BAC of the Act, the said deduction under Section 80D won’t be available.

Is long-term capital gains (LTCG) tax is applicable if the sale proceeds of a residential property sold after holding for 10 years are used to repay the loan for the purchase of a new residential property, which was registered two years before the sale of the old property? The equated monthly instalments (EMIs) are still being paid.

—Rakesh Kaul

We are assuming that both the properties are residential house properties and not residential plots. As the property sold by you was held for more than 24 months, it will qualify as a long-term capital asset (LTCA). The gain or loss arising out of the sale would be taxable in your hands as LTCG or long-term capital loss, respectively

As per Section 54 of the Act, LTCG from the sale of a house property held for more than 24 months is exempt from tax if the gains are reinvested in one residential house property in India. Various judicial precedents have also held that availing of a home loan does not disentitle one from the exemption.

However, the property must be purchased one year before the date of the sale of property or two years after the date of the sale of the property. You have acquired the property two years prior to the sale of the property. Accordingly, you shall not be eligible for deduction under Section 54, as the time frame for prior purchases is one year to avail the exemption.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at mintmoney@livemint.com

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