Present from employer, exceeding Rs5,000, is taxable and tax is to be withheld from wage

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—Identify withheld on request

Any present acquired from the employer, of a sum exceeding Rs5,000, is handled as taxable compensation in your fingers [as per Section 17(2)(viii) of the Income Tax Act, 1961 read with Rule 3(7)(iv) of the Income Tax Rules, 1962]. Your employer is required to withhold taxes out of your wage in respect of such a present.

My grandfather constructed a home in 1955 in Allahabad (Uttar Pradesh) whose present market worth ought to be round Rs1 crore. He had a son and a daughter. However he and his son (my father) didn’t get alongside, so he willed the home to me. My grandfather handed away in 1998 once I was minor, now the home is in my identify.

I’m nicely settled and don’t want that home. I’m pondering of transferring it to my sister who’s my solely sibling. Will there be any tax implications on her or me if I achieve this? Additionally what’s the strategy of transferring? I’m employed in a non-public agency whereas my sister is a authorities worker and each of us are common income-tax payers.

—Identify withheld on request

The gifting of property between siblings wouldn’t give rise to an earnings tax legal responsibility to both the giver or the receiver. It could be advisable so that you can doc the present in a authorized doc, that’s, a present deed and place it in your data. You have to to judge any stamp responsibility implications arising from the gifting of this property.

Nonetheless, any subsequent sale of the property by your sister can be taxable in her fingers as long-term capital good points. When the capital acquire is being computed, the interval of holding is reckoned from the interval of holding by your grandfather and also will embrace the interval the property was held by you as nicely, because the property that’s gifted is inherited. Additionally, the price at which your grandfather acquired the land, as elevated by any value of enchancment incurred (by him or your self, because the case could also be), can be handled as the price of acquisition with a purpose to compute the capital good points. For the reason that property had been acquired by your grandfather previous to 1 April 2001, your sister could have the choice of contemplating the honest market worth as on 1 April 2001 as the price of acquisition. Such value of acquisition and enchancment, if any, would then be adjusted for inflation between the 12 months of sale and 1 April 2001, by making use of the price inflation indices notified by the tax authorities.

I’m a senior citizen holding a Public Provident Fund (PPF) account. After completion of 15 years, I renewed it for one more 5 years and now the account is maturing in March 2018: after completion of 20 years. Is it permitted to resume it for one more time period of 5 years and if sure, will I proceed to get pleasure from the good thing about deduction beneath Part 80 C of the income-tax Act for the annual contributions.

Alternatively if after the time period of 20 years I decide not renew it additional then can I proceed to retain the account and get each the above advantages?

After retirement, if I don’t withdraw all the provident fund (PF) quantity and retain it for a few years, will I proceed to earn tax-free curiosity?


Assuming that you simply proceed to be resident in India, you might be eligible to increase your PPF account for an extra block of 5 years, both with or with out additional deposits. You have to to train this feature inside 1 monetary 12 months of the maturity of your PPF account. The deposits made by you into the prolonged PPF account, capped to Rs1.5 lakh, could be claimed as a deduction beneath part 80C of the Earnings-tax Act, 1961. Additional, the curiosity earned within the account will proceed to be exempt from tax.

The place you don’t make additional deposits into the PPF account, you’ll proceed to earn curiosity on the relevant price on the steadiness in your PPF account.

In your second question, assuming you will have contributed to PF for over 5 years, the curiosity earned in your PF account till your retirement is exempt from tax. Any curiosity earned by you after the date of your retirement can be taxable, as per current judicial precedent.

If a checking account is opened in a minor’s identify, will the curiosity earned on the deposit be taxed as it’s for others? I even have a joint account with my mom. I’m a co-holder just for administrative objective. She deposits and withdraws cash on her personal. Will the curiosity on this account be taxed in my identify, or her identify, or each of us?

—Vaidehi Sahay

We have now presumed that you’ve two queries – one referring to taxation of curiosity in your minor baby’s account and the second question is referring to taxation of curiosity on checking account the place you might be solely a co-holder along with your mom as the primary holder.

In respect of your first question, the curiosity earned on deposits made by you, in your minor baby’s account will must be added to your taxable earnings. An exemption could be claimed by you in respect of this clubbed earnings (not exceeding Rs.1,500 each year or the precise quantity of earnings).

In respect of your second question, we perceive that your mom is the first holder of the joint account, the funds belong to her and you might be solely a nominal co-owner.

Accordingly, the earnings from such financial institution curiosity ought to be liable to taxed within the fingers of your mom.

Parizad Sirwalla is companion (tax), KPMG.

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