Pension on quarterly basis liable to be taxed
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I am 57 years of age and my wife is 54 . All my earnings were from outside India. Since I have become an Indian citizen now, I have transferred all NRI deposits to normal savings deposits. I get income from bank deposits, mutual funds and trading in shares and I pay tax on my income. Can I transfer half of my deposits in my wife’s name in the bank and make her also an income-tax assessee? Will that help in saving tax? I am paying over about Rs 1 lakh for my daughter’s college tuition fees. How would it is treated?
Mohan
Chennai
The transfer of half of your deposits or shares in wife’s name will not help you in saving taxes in your account. Section 64(1) of the Income-Tax Act contemplates of including the income of one spouse in the hands of the other where assets are transferred by one spouse to the other without any adequate consideration or in connection with agreement to live apart.
With respect to tuition fees paid to university, college, school or other educational institution in India for the purpose of full time education of your daughter, you can claim deduction under Section 80C subject to a ceiling of Rs 1 lakh. However, any payment made towards development fees or donation or payment of similar nature will not be eligible for any deduction.
I have received 10 per cent bonus on the maturity of a deposit in post office monthly income scheme. I would like to know if it is taxable? If yes, will it be taxed as a long-term capital gain at a special rate of 20 per cent with indexation benefit? Is the rebate allowed by post office in depositing six or 12 installments in recurring deposit account taxable?
Raman Ojha
Via email
The bonus received on the maturity of deposit in post office monthly income scheme will be taxed under the head “Income from other sources”. In case of a rebate by the post office , the installments have to be treated as a benefit assessable under the head “Income from other sources”.
I have resigned from a private company. The company has contributed in my name to a superannuation fund. I have received 25 per cent of the commuted value amounting to Rs 90,000 on my resignation out of the fund. I have also received a quarterly annuity of Rs 1,600 from the fund. Kindly let me know the taxability of these sums.
Deepak
Via-email
The sums received from the superannuation fund both in commutation and by way of quarterly payments will be taxable. An exemption is available under section 10(13) of the Income-Tax Act, only in respect of any payment from an approved superannuation fund made on the death of a beneficiary or retirement at, or after, attaining a specified age, or on becoming incapacitated prior to such retirement. As there is only a resignation and no retirement on attaining the specified age, the commuted pension cannot be exempt. Pension received on a quarterly basis is also not entitled to exemption.
(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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