Tax Advice
Now, you can invest up to Rs 1 lakh in PPF a/c
By S.C. Vasudeva
Q. Recently it was reported in the Press that the government has raised the limit of deposit in PPF from Rs 70,000 to Rs 1,00,000. Kindly advise if this limit has been raised for the purpose of benefit u/s 80C from 1.12.2011 or the only benefit would be to earn tax-free interest on the additional Rs 30,000.Also, whether the enhanced limit is effective from 1.12.2011 or from 1.4.2012.
Gurnam Singh
A.
The limit of deposit in PPF account has been raised to Rs 1,00,000 wef 6th September, 2011. However, the limit under Section 80C of the Act for the purpose of claiming deduction has not been raised. The said limit remains at Rs 1,00,000. The enhanced limit for deposit in PPF account is applicable for the financial year 2011-12.
Rebate u/s 89
Q. I am a pensioner of the Punjab Government. On April 2, 2008, my pension was stopped and I received pension up to May 2008. For the financial years 2008-09, 2009-10 and 2010-11, my income from interest from MIS and fixed deposit was Rs 68,053, Rs 36,000 and Rs 68,059, respectively. For the financial years 2008-09 and 2010-11, income tax returns were filed by me and in these returns IT refund was shown as Rs 3,316 and Rs 2,122 respectively.
As per the court order in November, 2011, I have received pension of Rs 5,94,119. From Rs 5,94,119, year-wise amount of pension is Rs 89,466 for the year 2008-09, Rs 1,44,356 for the year 2009-10, Rs 1,90,360 for the year 2010-11 and Rs 1,51,650 for 2011-12 (up to October, 2011). Please guide me how income tax can be saved on this amount which was withheld by the government and was paid as per the court order. Now, no income tax has been deducted by the bank from Rs 5,94,119 at the time of payment.
In November 2011, Rs 1,00,000 has been deposited in a tax-saving scheme. Please guide me if there is any rule according to which returns can be filed now for the years for which I have received the pension now. If returns can be filed, then how much amount I would have to pay as income tax for each financial year.
Gurdial Singh
A.
(a) It is not possible to revise the return for the financial year 2008-09 as the same could have been revised by 31st March, 2011. However, you can revise the return for the financial year 2009-10 by 31st March, 2012. The return of the financial year 2010-11 can be revised up to 31st March, 2013.
(b) It would be advisable to include the above income of Rs 5,94,119 in the return for the financial year ending 31st March 2012 and seek the benefit under Section 89 of the Income Tax Act, 1961 (The Act).
IT return
Q. I am a government pensioner and file income tax returns regularly. My yearly total income is pension plus interest on deposits in bank(s) and post office. However, my total income does not exceed Rs 5 lakh. As per government notification, persons having total income of less than Rs 5 lakh are not required to file their income tax returns any more. In light of this notification, kindly advise:-
a) Whether the pensioners are also covered under this notification and not required to file income tax return? If yes, then do they need to inform about their income from interest to the authorities of bank disbursing pension to them?
b) For how long we need to retain the record pertaining to our yearly income.
c) Do we need to inform the income tax officer concerned that income tax return has not been filed as we are covered under respective notification.
Balbir Singh Batra
A.
(a) The notification applies to assessees earning income from salaries. The pension is taxable under the head income from salary. In all fairness, the notification should be applicable to pensioners. I may add that this notification was applicable for the financial year 2010-11 only.
(b) The notification was applicable to the assessees whose interest income from savings bank account did not exceed Rs 10,000. It did not apply to those assessees who had income from deposits other than savings bank account.
(c) It would be advisable to keep tax records for a period of seven years prior to the year in respect of which the return is being filed.
(d) There is no such requirement in law.
DTC regime
Q. Under Direct Taxes Code (DTC), exemption limit under Section 80C is Rs 1.5 lakh (one lakh in PPF account + Rs 50,000 in LIC). But PPF subscription for HUF is closed. One can take LIC for Rs 50,000 per annum. Where should the HUF invest the remaining Rs 1 lakh to get full rebate of Rs 1.50 lakh. Please advise.
Ramesh Marwaha
A.
The provisions of the Direct Taxes Code as they stand today restrict the allowable deduction in respect of insurance to the extent of Rs 50,000 only. The deduction allowable to approved funds is applicable to an individual assessee only. The present facility of the allowable deduction is to the extent of Rs 1,00,000. Therefore, the allowable deduction to an HUF stands curtailed to Rs 50,000 only in the Direct Taxes Code.
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