Q I’ve deposited a sum of Rs1 lakh by cheque to LIC underneath a single-payment coverage taken in favour of my married daughter. Please advise whether or not this cost would mechanically develop into a present to my daughter or another formality is required to be accomplished.
How the maturity proceeds of the coverage can be handled for income-tax objective in her fingers? Is she required to file an income-tax return, in case her earnings is lower than the utmost quantity which isn’t chargeable to income-tax? Kindly advise whether or not a sum of Rs 1 lakh given to my son-in-law as a present would appeal to any tax on my or his fingers. — Shankar Singh
Your queries are replied right here underneath:
A. (I) It might be advisable to make out a letter with regard to the quantity of Rs 1 lakh paid within the form of single cost to LIC for a coverage taken in favour of your married daughter. The letter ought to state that the cost of premium be handled as a present to her. Your married daughter ought to make out a letter addressed to you accepting the stated reward.
(II) The maturity proceeds of the coverage can be handled as capital in her hand in case the premium payable doesn’t exceed 20% of the particular capital sum assured. Since it’s a single-premium coverage, most likely, the quantity acquired in extra of premium can be taxable in your daughter’s fingers as and when the coverage matures.
(III) Usually, an individual needn’t file a tax return in case his or her earnings doesn’t exceed the utmost quantity chargeable to tax. Nevertheless, there are two exceptions to this basic rule that are;
(a) An individual who’s claiming any deduction underneath chapter VIA (reminiscent of contribution to Public Provident Fund, cost of life insurance coverage premium and many others) or;
(b) An individual who
(i) has deposited an quantity or combination of the quantities exceeding Rs 1 crore in a number of present accounts maintained with a banking firm or a co-operative financial institution; or
(ii) has incurred expenditure of an quantity or combination of the quantities exceeding Rs 2 lakh for himself or another individual for journey to a international nation; or
(iii) has incurred expenditure of an quantity or combination of the quantities exceeding Rs 1 lakh in direction of consumption of electrical energy; or
(iv) fulfils such different circumstances as could also be prescribed.
(v) The reward made to your son-in-law wouldn’t appeal to any tax legal responsibility underneath the provisions of the Act.
Q. Please let me know the identify of the fund which is completely used for the welfare of Indian navy individuals and the contributions made are 100% exempted from income-tax much like the contributions made to the Prime Minister’s Nationwide Aid Fund. Additionally please give the deal with of the workplace the place these contributions might be despatched. — PC Garg
A. The names of the funds that are completely used for the welfare of the Indian navy personnel are as underneath:
a) The Military Central Welfare Fund
b) The Indian Navy Welfare Fund
c) The Air Power Central Welfare Fund
These funds have been established by the armed forces of the nation for the welfare of the previous and current members of such forces or their dependents. The contributions to such funds are exempt to the extent of 100 per cent. The donations might be despatched to the headquarters of the three Wings of the armed forces based mostly in New Delhi.
Q. I’m a retired Central Authorities servant aged 77 years. Kindly advise my whole tax legal responsibility for the monetary yr 2019-20. My particulars are as underneath:
1. Gross pension (projected)
2. PPF deductions (precise)
3. Medical bills i.e. price of medicines and medical assessments i.e. blood sugar, cholesterols, lipid profile, thyroid take a look at (for my spouse) and many others. throughout 2019-20. (precise until date) Rs 25,000
4. Curiosity earnings on fastened deposits/financial savings accounts underneath part 80TTB Rs47,000
— PDS Sharma
A. On the premise of figures given within the question, your gross whole earnings works out at Rs 6.03 lakh earlier than permitting deductions underneath Part 80C, Part 80D and Part 80TTB of the Earnings-tax Act, 1961 (The Act). The quantity of taxable earnings after permitting the permissible deductions would work out at Rs 4.31 lakh. Your whole earnings subsequently just isn’t taxable after contemplating the rebate allowable underneath Part 87A of the Act. You’ll, nevertheless, need to file return of earnings as required underneath provisions of Part 139 of the Act since you’re claiming deductions underneath Chapter VIA of the Act.