Recently, I switched jobs. I have closed the provident fund account with my previous organisation and I have withdrawn the money. Is that amount taxable?
Any payment received from a recognised provident fund scheme which is set up under the provisions of Provident Funds Act, 1925, or from any other provident fund set up by the central government and notified by it in this behalf in the official Gazette, is exempt from income tax. While switching jobs, you had the option of transferring the balance in your provident fund account to your new employer. However, assuming that you were a member of a recognised provident fund, the withdrawal from the provident fund account will not be taxable at your hands. If you ask our advice, we would suggest not to spend the money but to invest it judiciously in either debt or equity schemes. Provident funds come in handy as nest egg when one retires and has no source of income.
I have taken a loan to buy a house. But the house is not ready, forcing me to stay in a rented accommodation. I have already begun to repay the home loan, which includes the principal and interest on it.Will I be entitled to: a) Tax benefit on principal repayment under Section 80C; b) Tax benefit on interest payment under Section 24; and c) HRA benefit living in the rented house?
The repayment of principal amount of loan will qualify for deduction under Section 80C of the Income Tax Act, 1961 provided the amount has been borrowed from a recognised home loan lender. You will not get the deduction for payment of interest on the borrowed capital until the house is completed. However, the accumulated balance of interest paid during the construction period can be divided in five equal parts and claimed as deduction in the five years starting with the year of completion of construction. Additionally, since you are living in a rented accommodation, you are entitled to claim benefit for the house rent allowance under Section 10(13A) of the Income Tax Act.
If a person pays an annual rent of Rs 1,80,000,does he have to deduct tax at source before making the rent payment? The tenant’s income tax returns in this case are not required to be audited under the Income Tax Act.
Since the annual gross income or turnover of the individual tenant in this case is an individual whose accounts are not subject to tax audit under Section 44AB, he is not required to deduct tax at source, while paying the rent.
Please advise me about tax rebate on purchase of new property.
There is no provision for tax rebate on purchase of property under the Income Tax Act. However, there are certain benefits which are ancillary to the purchase of property. For example, if you buy a property for the purpose of business, you can claim a certain prescribed percentage of the cost of the property as expenditure in the form of depreciation. If you buy a property by raising a loan and generate rental income from the property, you can claim the payment of interest as expenditure for earning the income. If the property purchased will be used to build a house for selfoccupancy, you get rebate for repayment of principal amount of loan, subject to limits prescribed under Section 80C and also the interest paid on the loan taken for the construction of the house up to Rs 1.5 lakh per annum.
My daughter sends me Rs 10,000 a month.Will this be treated as additional income to my salary? Will I need to pay tax on this amount?
For the purpose of income tax, there is a clear difference between receipts and income. All receipts are not taxable at the hands of the recipient. According to the provisions of Section 56 of the Income Tax Act, certain amounts received by an individual without any consideration from specified relatives including a daughter, is not taxable. Therefore, the Rs 10,000 a month received by you from your daughter will not be treated as your income for the purpose of income tax.
I am a salaried person and own a house which is rented out. I have taken a home loan and I know I can claim a deduction under “income from house property” for the interest component of EMIs I am paying. I would like to know whether I can also claim deduction under Section 80C for the principal component of the housing loan EM Is being paid by me for my property?
The repayment of principal amount of loan qualifies for deduction under Section 80C of the Income Tax Act 1961 only if the house on which the loan is taken is self-occupied. In your case since the house is rented out, this deduction will not be available. Moreover, the limit of payment of interest of Rs 1.5 lakh, will also not be applicable.
I am investing in my minor son’s name for the past three years. Do I need to file tax in his name too?
According to the provisions of Section 64 of the Income Tax Act, 1961, if you are investing in the name of your minor son, the income from such investments will be clubbed with your income for the purpose of taxation. Once your son turns major (18 years old), you may gift him a lump sum and if your son earns any income by investing that amount, it will be taxed in his hands.
I have received my tax refund. But it seems to be less than what is due. Can I take this up with the tax authorities?
Alongwith the refund cheque, you would have also received an assessment order giving detailed calculation of your income and computation of tax thereon. On going through the details if you find that there has been an error on the part of income tax department in calculating the amount of refund, you can approach your assessing officer.
My uncle is an NRI. He wants to donate money to a school in India. He has opened an NRI bank account and has made me a mandate holder. He has asked me to withdraw money from that account and send it to the school. I would like to know if there are any tax implications if I operate the account.
You will be operating the account as per your uncle’s instructions to his bankers, therefore, as far as you are concerned, apparently there should be no problem. However, instead of withdrawing the money in cash we suggest that you should make the payment to the school in account payee cheques and also obtain a receipt. This will help you prove the credentials of the transaction, should there be any enquiry.
