I incur heavy medical expenses on the treatment of my 10-year-old son. Can I claim deduction for these expenses while calculating my income-tax liability?
If your son is suffering from any of the diseases specified under Section 80DDB of the Income Tax Act, you can claim deduction for the expenses incurred on his treatment up to a maximum of Rs 40,000 in a year. This deduction is available only for the treatment of an assessee or his dependents. The diseases specified under the Section are:
• Neurological diseases, where the disability level has been certified to be 40% or more. These include dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and Parkinson’s disease
• Malignant cancers
• Full-blown Acquired Immuno-Deficiency Syndrome (AIDS)
• Chronic renal failure
• Haematological disorders such as haemophilia and thalassaemia.
Along with the claim for deduction, you will have to give proof of expenses incurred and a medical certificate from a specialist working in a government hospital. Also, if you receive any money under a medical insurance plan, this amount will be subtracted from the deduction.
How can I use Form 15G to save tax on interest income earned from bank deposits?
Form 15G is a composite form that has replaced forms 15G, 15H and 15I, which were earlier used for declaration of non-deduction of tax at source. In case your annual income is below the taxable limit (Rs 1.10 lakh for men, Rs 1.45 lakh for women and Rs 1.95 lakh for senior citizens), you can fill up Form 15G to declare the same so that no tax is deducted at source, whether it is interest income from bank deposits or tax-saving bonds. The declaration in Form 15G has to be submitted on a yearly basis (generally at the beginning of the year) for non-deduction of TDS.
My wife died earlier this year.The bank fixed deposits that we jointly held had her as the first account holder. Now I am the only holder of these deposits. Is this amount taxable? Also, is hereditary income taxable? Does making a will affect the taxability of inherited income?
The deposit amount transferred in your name is not taxable in your hands. There is no tax on inherited money. However, the interest earned on the deposits will be treated as your income and taxed accordingly from the time they were vested in your name. A will defines who the owner of the deposits or other assets will be after the death of the person who has made the will. The making of a will makes no difference to the taxability of income.
I have earned income under two heads—salary and capital gains.Which form should I use to file my return and how will my tax be assessed?
As an individual assessee, if you have earned income from capital gains in addition to your salary, you will have to file your income tax return on Form ITR 2. For your capital gains, first you will have to segregate these into short-term and long-term (if you hold shares for more than a year before selling, the gain will be termed as long-term, otherwise it will be a short-term gain). If you have paid securities transaction tax on all shares, longterm gain will be exempt from tax and short-term gain will be taxed at a flat rate of 10%. Your gross tax outlay will depend on your salary income, income from capital gains, income from other sources like bank interest and the deductions to which you are entitled.
I have let out my flat. Can I claim the expense incurred on its repairs as a deduction from my rental income?
A standard deduction of 30% from the gross rent is allowed for maintenance and repairs, irrespective of the actual amount spent by you. However, you can also claim deduction from the rental income for the municipal and other local taxes paid by you. Also, if you have taken a home loan, the interest component is allowed as an expense.
Will my short-term capital gains from sale of shares be clubbed with my salary income and taxed at the normal rate?
If you sold your shares through a recognised stock exchange and securities transaction tax was paid, then your short-term capital gains will be taxed at a flat rate of 10%, plus the applicable education cess and surcharge. If the shares were not sold through a recognised stock exchange, the short-term gains will be clubbed with your income and taxed at the normal rate.
Are contributions to EPF considered for deduction under Section 80C in the same manner as those to PF?
Any contribution by an individual to a provident fund scheme qualifies for deduction under Section 80C. The scheme may be known by any name— Provident Fund (PF), Employees’ Provident Fund (EPF) or Voluntary Provident Fund (VPF). Therefore, as far as Section 80C is concerned, there is no difference in the tax treatment of EPF and PF.
I have taken a personal loan against my credit card.The bank is charging service tax on the interest amount payable on that loan. Can it do so?
Credit card is a service which is taxable under the service tax rules. As the personal loan has been provided under a credit card arrangement with a bank, the service will attract service tax. You will have to pay this amount on the interest payable on the loan.
My company deducts TDS from my retainership fee. Do I still need to pay tax on my net income?
The tax deducted at source (TDS) is an ad hoc deduction of income tax at the time of payment of salary. The employer deducts the tax and deposits it with the government on your behalf. However, you still need to file your income tax return based on your actual income, including income from all other sources. If the TDS works out to be less than the total tax you have to pay, you will need to pay a further selfassessment tax. On the other hand, if the TDS is more than the actual tax payable, you will get a tax refund. You can also claim deductions for the expenditure incurred in connection with your retainership income.