Mediclaim for parents can earn tax deduction

Jan 26, 2011 - Kamal Rathi

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A sailor, who has an NRI status, gets his monthly salary in US dollars, remitted by his foreign employer via TT transfer to his NRE account. He gets his monthly salary throughout the year even during his vacation. Can he claim tax exemption?
Orman, Via email

According to Section 6(1) of the Income-Tax Act, the residential status of an individual, who is rendering service outside India and who visits India during leave or vacation in any fiscal year, or an individual who is outside India and comes on a visit to India in any fiscal year will be determined as under:

(a) An Indian citizen who leaves India in any financial year for the purposes of employment outside India or as a crew member of an Indian ship would be treated as a resident in India if the period of his stay in India in that year amounts to 182 days or more. Conversely, if the period of his stay in India is less than 182 days, he will be treated as a non-resident for that year and his foreign income wo-uld not attract tax liability.

Further, any interest received by you on money standing to your credit in NRE account maintained by you with any bank in India in accordance with the Foreign Exchange Management Act, would also be exempt from tax.

I have paid a premium of Rs 15,768 towards a medi-claim policy for myself, my wife and children in the fiscal 2008-09 and paid Rs 16,250 towards mediclaim premium for my parents. Please clarify, if Rs 15,000 deduction allowed under Section 80D, includes the premium paid for parents also?
Sudarshan, Via email

As per the provisions of Section 80D, you are eligible to claim an additional deduction of Rs 15,000 (the deduction would be Rs 20,000, if your parents happen to be senior citizens) on the mediclaim premium of your parents.

This deduction would be over and above the deduction of Rs 15,000 allowable for the premium paid on your family.

My brother would be completing 65 years on May 10, 2011. Is he eligible to claim the tax benefits for senior citizens in the fiscal 2012?
Sainath, Via email

A special income-tax thre-shold limit will be applicable to a resident Indian, who is of the age of sixty five years or more at any time during the previous year. So, your brother will be eligible to claim senior citizen benefits on his income of FY2011-2012.

Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabadbased accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com

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