The Hindu Business Line : No tax by-pass for heart drugs

Can I claim the deduction under Section 80DDB in respect of the expenditure on medicines incurred as part of the post-operative treatment? — T. S. Raghuram

Section 80DDB read with Rule 11DD provides for claiming a deduction in respect of medical treatment of certain diseases and ailments.

The angioplasty treatment undergone by you does not appear to fit into the diseases and ailments mentioned in the said Rule.

You will, therefore, not be able to claim deduction in respect of the expenditure on medicines incurred as part of the post-operative medical treatment.

I have constructed a house in Thiruvananthapuram with a housing loan of Rs 20 lakh.

The EMI works out to Rs 20,000. What tax benefits can I can claim on the same? — B. R. Priya

The principal repayment out of the EMI will qualify for deduction under Section 80C of the Income-Tax Act in computing your total income.

The interest component of the EMI will qualify for deduction under Section 24 in computing your income from house property. If the property is self-occupied and assessed as such, the maximum deduction that can be claimed on the interest would be Rs 1,50,000, while if it is let out, the deduction in respect of interest can be claimed without any ceiling.

I am a housewife. My father gifted me Rs 2 lakh. I have done some intra-day trading in shares, buying and selling shares within short spans of 4-5 days.

I have also been dealing in futures and options. I have made a net gain from such trading in shares, futures and options. What would be the tax implications thereon? — Sunita

If there is a large volume of trading in shares particularly without delivery, it is very likely that the gain will be treated as business income. Similarly, the gain from dealing in futures and options will be treated as business income.

The gain from dealing in shares without delivery could also be treated as speculation income.

The gain from dealing in derivatives will however not be treated as speculative if the transaction is carried on through a registered broker or sub-broker or by banks or mutual funds and where the transaction is carried out electronically on screen-based systems and which is supported by a time stamp contract note that indicates the client identity and the number allotted under the SEBI Act or the SCR Act or the Depositories Act and also gives the Permanent Account Number of the client.

My wife's income for the financial year 2006-07 from taking tuitions, and drawing and painting classes is Rs 70,000. She also has a capital gain of Rs 30,000 from dealing in shares. Is she required to file a return of income? — Sunil Soni

Your wife's income is Rs 1 lakh for the financial year 2006-07.

The maximum amount not chargeable to tax in the case of a woman assessee not being a senior citizen for the assessment year 2007-08 (financial year 2006-07) is Rs1,35,000.

Since your wife's income does not exceed the maximum amount not chargeable to tax, there will be no requirement for her to file a return of income.

I sold the shares of i-flex corporation to Oracle Corporation last year. Since the transaction was not routed through a recognised stock exchange, no Securities Transaction Tax was paid at the time of sale.

What will be the tax liability on the sale of the shares which have been held by me for more than 10 years? — Vivek Bhatnagar

The capital gains arising from the sale of i-flex shares will be chargeable to tax at 20 per cent (as increased by the appropriate surcharge and additional surcharge). The capital gain in such a case will be computed after allowing you the benefit of indexation in accordance with Section 48. The tax rate mentioned above is provided for in Section 112.

Since the I-flex shares are listed on a recognised stock exchange in India, you can pay tax at 10 per cent of the gain (as increased by the appropriate surcharge and additional surcharge) computed without the benefit of indexation if this is more beneficial.

You have mentioned that family pension is eligible for standard deduction. I understand that such deduction is no longer permissible. Kindly clarify. — R. Venkataraman

A deduction can be claimed in respect of family pension of a sum equal to one-third of such income or Rs 15,000, whichever is less. A provision in this regard is still available in Section 57(iia).

It is only a standard deduction in respect of salary which is no longer available.

I work for a Kerala Government-owned undertaking.

I propose to opt for a voluntary retirement scheme on health grounds. My employer company tells me that the VRS compensation of up to Rs 5 lakh is exempt and that the excess over the same will be taxable.

However I am informed that the entire VRS compensation will be exempt. Kindly clarify. — Balachan

Only Rs 5 lakh will be eligible for the exemption. Section 10(10C), which allows an exemption in respect of VRS compensation, provides that the maximum amount that can be claimed as exemption is only Rs 5 lakh. The excess over the same will not be eligible for exemption and will therefore be taxable in your hands.

I am a salaried employee and my employer has deducted tax at source on the salary.

I also have interest income from fixed deposits with bank for the financial year 2006-07 what is last day for filing my return of income? — Amit Vohra

The last date for filing the return of income under Section139(1) in your case would be July 31, 2007 for the financial year 2006-07, that is, the assessment year 2007-08.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002)

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