While we receive several queries from our readers on topics ranging from taxation and pension to insurance and stocks, we are unable to feature them all. In an attempt to provide a more comprehensive forum, we are introducing a revamped Query Corner, where we shall try to accommodate and address as many of your financial concerns as possible. Continue to write in.
Pension
Q. I had bought a pension plan some years ago, but now realise that on maturity the projected corpus will not be sufficient. Should I buy another plan or increase the payment in the existing one?
— Ranjan Seth
There is no need to buy another pension plan as you will end up paying the initial charges all over again. Instead, continue to invest more than the premium every year in your existing plan. Insurance companies allow this, subject to certain limits. You could also consider joining the New Pension Scheme (NPS), which will be launched in May this year. The fund management charges of the NPS will be significantly lower than those of unit-linked pension plans offered by insurance companies and those of mutual funds.
Net Worth
Q. I want to calculate my net worth. For real estate, should I consider the price I paid for my apartment or go by its current market value?
— Bhavesh Singhal
You should go by the current market value of the property for calculating your net worth, but you should also deduct any outstanding loan from this amount. So if your house is worth Rs 50 lakh and you have an outstanding housing loan of Rs 25 lakh, you own only Rs 25 lakh worth of the house.
Tax
Q. I'm a salaried person and Rs 1,000 is deducted from my salary every month as TDS. But my total tax liability for 2008-9 works out to Rs 25,000 as I have other sources of income as well. Since the last date for payment of tax is over, will there be penal action against me for delayed payment of tax?
— Vivek
The due date for payment of tax was 15 March. However, you can pay it even if you missed the deadline. You will need to fill up Form 280, which is available at various banks or can be downloaded from www.incometaxindia.gov.in or www.tin-nsdl.com. You will then have to deposit the amount in any specified bank branch. There is a nominal penalty of 1% for every month of delay. Apart from this, there is no other fine or penal action. Remember to get the BSR number of the branch stamped on the receipt as you will have to mention it in the tax return form.
Q. I am working with a private real estate firm. My employer has asked me to quit the job and has offered me three months' salary in lieu of the notice period. However, I have found another job and will start work from next month. How will the compensation be taxed?
— Vivek Kumar
The three months' salary received by you as compensation in lieu of the notice period will be taxed as salary income under the head 'salaries'. Your employer would have deducted tax on this payment and will issue Form 16 after including the pay for the notice period. In case your employer has not deducted tax on the notice period pay, you will be required to pay advance tax on your own.
Q. I received Rs 5 lakh after my father's death in accordance with his will. I invested this money in fixed deposits and mutual funds (MFs). I will receive about Rs 30,000 this year as interest from FDs and have already started receiving dividends from MFs. I have no other source of income. Am I required to file tax returns?
— Rekha Puri
For the financial year 2008-9, income up to Rs 1.8 lakh is exempt in the hands of a woman assessee. Your total estimated income from fixed deposits is Rs 30,000, which is well below the minimum taxable limit. Also, dividend income from mutual funds is exempt in the hands of the recipient according to the Income Tax Act. Therefore, you are not required to file your tax return.
Q. I work in the oil and gas sector, with the offshore (marine) wing of a company that is based in Zurich, Switzerland. I work on board a vessel for five weeks at a stretch and then return to India for a five-week break. I am paid for both these stints. Do I need to pay any taxes in India?
— Ramesh Shekhar
According to the Income Tax Act, if an individual stays in India for 182 days or more, he is treated as a resident Indian and is liable to pay tax for income earned abroad also. Therefore, if you stay in India for more than 182 days in a financial year, you will be required to pay taxes on your total income earned anywhere in the world.
In this case, however, you will be given the double taxation relief if you have paid taxes in Switzerland. But if your stay in India is for less than 182 days and the income was received outside India, you will be considered a non-resident (for income tax purposes) and your income will not be taxed in India. In this case you will not need to file your income-tax return.
Q. I have a house in Delhi and am planning to buy a flat in Mumbai as I frequent the city for business purposes. How many houses can be treated as self-occupied from the income tax point of view?
— Gautam Tankha
As per the Income Tax Act, only one house under the possession of the assessee can be treated as self-occupied. The other house/houses will be "deemed to have been let out" even if they are used for personal purposes, and notional rental income is computed for such properties. Notional rent is the rental income which the property is reasonably expected to fetch if it is let out. For example, if the building in which your flat is located has another flat similar to yours and it is rented out for, say, Rs 20,000 a month, the notional rent for your flat would also be Rs 20,000 a month. Your flat in Mumbai would be taxed on the basis of this notional rental income.
