'Shall I show it in my tax property (gift tax)?'
Anil Rego, CEO, Right Horizons, answers your personal income tax queries.
Rafeeq Ali: My father gifted a home to me and my brother in the name of registration and remaining (other brothers are also included).
A few years ago, I was involved in share markets and mutual funds investment and banking asked me to submit an ITR file.
So I am very worried about my situation.
Shall I show it in my tax property (gift tax)?
Kindly clarify my doubt.
Anil Rego: The relationship of father and son is covered under the definition of 'specified relatives'.
So, as per the current income tax rules, a father gifting his son is fully exempt, hence attracts NO tax in your hands.
You can show it in your assets.
However if, after computation, you do have tax payable for previous years on your shares and mutual fund transactions, you have an exposure and can consider paying it with interest.
Satish Kumar Sharma: I have two queries.
(a) After seven years, I received an L&T Infrastructure bond maturity amount of Rs 44,400.
When I initially applied for these bonds, I submitted my PAN, still no TDS was mentioned.
Is this complete amount included as additional income in my tax return?
(b) Annually, Rs 715 as gold bonds interest is credited to my saving bank account.
In my IT return, I include 4*quarterly interest amount as income.
Saving bank interest on Rs 715 is also included in the quarterly interest.
Am I to include, separately, a sum of Rs 715 in my yearly income for income tax purposes?
Anil Rego: Here are the responses:
(a) The interest on the bonds is taxable in the hands of investors.
The full maturity amount is not taxable.
You need to reduce the invested amount to arrive at the interest you have received and you would need to pay tax on this interest received.
(b) The interest on gold bonds is taxable and hence you need to show this in your returns.
The saving account interest is to be shown separately as it attracts deduction under section 80TTA for upto Rs 10,000 and you would need to pay taxes only if it crosses this limit.
In summary, you need to show both the interest on gold bonds and the savings account interest, but separately and after claiming the deduction above for savings bank interest.
Ramji Sreenivasan Rao: Sir, I had invested Rs 8 lacs in Bajaj single premium policy in 2005.
- ULWTDRW Rs 3,00,000 in 2006
- ULWTDRW Rs 2,50,000 in 2009
- ULWTDRW Rs 5,00,000 in 2010
- ULWTDRW Rs 1,62,000 in July 2021
Policy payout: Rs 12,12,000
Premium Paid: Rs 8,00,000
Policy Income: Rs 4,12,000
TDS @ 5 per cent: Rs 20,600
When I had taken this policy, the provisions of insurance being 10 times was not there.
Now, can I index the policy and arrive at gains? It's wrong to take Rs 412,000 as income this year.
Please guide me.
Actually, in the period that you took the policy, the provision was not 10 times, but five times.
One can avail the exemptions under Section 10D (ie the maturity amount is tax free) if the premiums paid in a single year during the policy term are not more than 20 per cent of the sum assured for a policy purchased between April 1, 2003 and March 31, 2012.
The taxability -- if it crosses 20 per cent of the sum assured - -is not explicit in the tax laws.
But the common practice is to treat it as long term capital gains if the tenure is greater than three years, in which case you can also index the invested amount while applying the long term capital gains tax rate.
Do you have any personal income tax query? Please mail us at email@example.com with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.
Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.
You can find more of Mr Rego's answers here.
Feature Presentation: Ashish Narsale/Rediff.com