Maximum deduction is capped at Rs 1 lakh
I am a government employee. I am planning to deposit Rs 2 lakh or more in a bank as a fixed deposit or purchase a Kisan Vikas Patra in the name of my wife, who is a home maker and does not have any income. In that case, will the interest earned by her at the maturity be taxable?
Ram Shastry
Via email
Section 64(1) of the Income Tax Act provides that where there is a transfer of an asset between spouses without adequate consideration, the income arising on transfer of such asset will be clubbed in the hands of the transferor. Hence, the interest earned on fixed deposits and Kisan Vikas Patra will be taxed in your hands.
I am a central government employee. As I was appointed in February 2006, I fall under the new pension scheme. My salary comprises of basic pay, grade pay, HRA, dearness allowance and transport allowance. Deduction towards provident fund is Rs 5,408 and contribution towards CGEIS is being made from my salary income. Can I get my deduction under Section 80C by investing up to Rs 1 lakh, if yes, how?
Satish Waghmare
Via email
You can claim deduction under Section 80C by investing in specified instruments. The maximum deduction available under this section is Rs 1 lakh.
The contributions/investments also include employee’s contribution to a recognised provident fund and contribution to CGEIS (central government employee group insurance scheme). In your case, you can invest the balance amount remaining after your contribution to provident fund and CGEIS in specified instruments laid down under Section 80C subject of course to the overall ceiling of Rs 1 lakh.
The deduction can be claimed by giving proof to your employer who will take into account while computing your tax to be deducted at source from your salary.
I am a 69-year-old house wife. Since I am not actively involved in family chores, I have decided to try my hands at share trading. I got my PAN card in February 2010. So far I have not done any transactions. Kindly clarify the following points:
1) Since I got my PAN in February, do I have to file an I-T Return for the fiscal 2009-10 despite having no income? In future, if my income is less than the taxable limit, do I have to file the return? If yes, which form has to used ?
VKV
Via-e-mail
It is not mandatory to file return of income if your income is below the threshold limit. If a person trades in shares on a regular basis and the frequency of transactions is also huge, then the income/loss has to be treated under the head “Profits & Gains from Business or Profession”. Otherwise, the income will be included under the head “Capital gains”. ITR-4 will be applicable to you if the income derived by you from trading in shares is treated as business income. However, if the income from shares is shown as capital gains and you have no other business income, ITR-SARAL-II will be the appropriate form for you.
(Kamal Rathi is a
chartered accountant,
representing Rathi & Malani, a Hyderabad-based
accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com.)
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