My wife sold some shares and made a profit of around Rs 40,000. The shares were held for more. She has also earned some short-term gain from sale of shares of around Rs 23,000. She has other income, including a bank interest of around Rs 3,500 during the financial year 2008-09. She is a housewife and does not have any other income except as mentioned above.

My question is, whether she has to file income tax returns?

?Satish Sharma

Assuming that your wife is not a senior citizen, the basic exemption limit applicable to her would be Rs 1,80,000. Her income as mentioned above is much lower than this limit. Note that even taxable capital gain can be included within the non-taxable limit of Rs 1.80 lakh to determine liability to tax. Therefore, your wife is not liable to pay tax and hence does not need to file a tax return.

I am the nominee of a fixed deposit held by my mother who expired recently. It?s a long term FD and locked in at a good interest rate. So I don?t want to close it now. When my mom was alive, she used to give a Form 15G so that no TDS is deducted. Now that she is no more I wanted to know how the interest portion would be taxed. It?s a 10 year FD with cumulative interest and delivered on maturity. My query is

1) If I hold on to the deposit, which I would like to, then how would the interest portion be taxed as the deposit is in the sole name of my mother and I am the nominee who would receive the proceeds upon maturity

2) At the time of maturity, is the amount totally tax free in my hands?

3) How do I avoid TDS from being deducted or can I claim a refund of TDS as my mother has expired and there is no point in deducting TDS in her name?

4) If the interest portion is taxable in the hands of the receiver/nominee, then can I show the interest proceeds in my HUF account as the amount is not earned by me?

?Dr Prabhu

Upon the passing away of the deposit holder, the proceeds of the deposit have to be paid to the nominee. The deposit cannot continue in the name of a deceased person. The interest though to be paid on a cumulative basis should have been offered to tax on an accrual basis each year. If this hasn?t been done, then up to the point of the continuance of the deposit, the interest will be taxable in your mother?s hands and the tax return for the year would have to be filed in the name of your mother?s estate. There would be no tax incidence for you – the nominee. After receiving the funds, you are free to invest the same in the name of your HUF if you so desire.

My date of birth is March 15, 1946 and I will be 65 in March 2011. From which year will I be able to avail of the senior citizen status as per income tax – will it be year 2009-10 or 2010-11? The confusion is due to the difference in the calendar year and financial year and my birth date falls in March.

?Brinder Parhar

Sec 80DDB states that an individual who is 65 years of age or more at any time during the previous year. Consequently, one can claim the higher threshold of Rs 2.25 lakh in the same year even if the birthday was March 31.

Even if your birth date falls in March, you will be a senior citizen for the entire FY 10-11 (assessment year 11-12).

1) I know of post offices and SBI where one can have a PPF account. I have an account with my local post office, which I plan to transfer to SBI for ease of operations. Are there any other banks where I can transfer my existing PPF account?

2) Regarding post maturity continuation, if the account is continued along with continuing subscription, is the tax benefit available in this 5 year period?

3) How is the interest on the principal calculated? e.g. If Rs 50,000 is deposited on say, April 12, 2009, will interest accrue from that day or from the end of that month, i.e. from May 1 ?

? Nainish Lubree

1. Branches of SBI and its subsidiaries, a few branches of some nationalised banks and all head post offices have been designated as ?accounts offices? under the scheme.

2. As per Sec 9(3) of the PPF Scheme, at its maturity, the account can be continued for a block of 5 years. This facility is available for any number of blocks on expiry of each of the extended periods. The continuation can be with or without contribution. The contributions to PPF are eligible for the deductions u/s 80C, even if the contributions are made to post-maturity continued accounts.

3. Interest is calculated on the lowest balance between the close of the fifth day (and not tenth, as in the case of savings account) and the last day of every month and is credited to the account at the end of each financial year i.e., on March 31. For the case cited by you, the Rs 50,000 would earn interest from May 1.

?The authors may be contacted at wonderlandconsultants@yahoo.com