Ask us on Investments

Q I am a retired bank officer aged 70. I have a health insurance policy with a coverage of ₹4 lakh under a special scheme of IBA (Indian Bankers Association). The maximum coverage for family is ₹4 lakh under the scheme. Top-up to a maximum of ₹5 lakh is available. I want to have a coverage of minimum ₹20 lakh for me and my wife. Kindly advise.

M. Gopinathan

A The policy, which you have currently, might be a group health insurance policy designed for retired bank staff. The policy might not be customisable or might be subject to negotiations between IBA and unions. Against this backdrop, it is advisable to take a separate individual health policy, in addition to your bank policy, with a basic coverage (Sum Insured) of ₹5 lakh. If you cannot afford this additional individual base policy, you can go with your bank policy itself. But, having a individual health policy has more benefits.

For a coverage of up to ₹20 lakh, you can buy a super-top up health insurance policy, with a deductible of ₹5 lakh, if you purchase an individual base policy for this amount. If you prefer to use only the bank policy, then your deductible amount for the super top-up policy must be ₹4 lakh only.

There are two top-up policies available in the market viz. top-up and super top-up.

Both are completely different. For a complete understanding about the difference between the two policies, you can refer to the Moneywise article titled ‘Top-up vs. super top-up’ dated March 17, 2025. The premium cost for the super-top up health insurance policy is costly when compared with the top-up policy. Still, for your age, it is advisable to buy the super top-up policy to avail maximum benefits. Most health insurance companies offer both the policies, but you need to be careful to check whether you are really buying the super top-up policy. You can also buy an individual health insurance base policy with the Sum Insured of ₹20 lakh but that is highly expensive, and we would not suggest it.

Q I am 73 years old. I want to sell my 4-cent land purchased in 2007. What will be my tax liability under the Income Tax Act.

Sivanandan

A In the Union Budget 2024-2025, presented on July 23, 2024, Union Finance Minister Nirmala Sitharaman said long-term capital gains on all financial- and non-financial assets will attract a tax rate of 12.5%. However, in her Budget speech, she did not explicitly mention that the reduced 12.5% (from the earlier 20%) tax rate on LTCGs is without the indexation benefit.

Later, on August 7, 2024, the Finance Bill 2024 was passed in the Lok Sabha with an amendment that gave a relaxation to the new capital gains tax on real estate. The amendment was introduced after widespread criticism from various corners, including Opposition parties and tax professionals. As per the amendment, individuals or Hindu Undivided Families (HUFs) who purchased houses or other immovable property before July 23, 2024, have two options regarding the treatment of long-term capital gains and they can choose any one option that is suitable for them. First option is they can choose to pay straight 12.5% tax on the capital gains without claiming the indexation benefit. Or the second option is that they can choose to pay 20% tax on capital gains, after claiming the indexation benefit.

Further, according to the Income Tax Act and as per the Union Budget 2024-25, if you have owned an immovable property (land) for more than two years (24 months), then it is considered a long-term asset. In your case, you have purchased the land in 2007 and therefore, if you earn capital gains by selling the land, it will be considered Long Term Capital Gain (LTCG).

Since you have purchased before the July 23, 2024 window, you can choose any one of the tax rates – 12.5% on capital gains without indexation or 20% on capital gains with indexation benefit. The choice is yours.

(The writer is an NISM & CRISIL-certified wealth manager)