I am serving in a multinational corporation earning around Rs 5.6 lakh per annum. My contribution towards PPF/LIC etc is above Rs 1 lakh annually. I want to know whether I can claim income tax rebate on HRA, as I am residing at my parents house at Chandigarh and paying token house rent to my parents @ Rs 8,000 per month.
?Varun Sehgal
An employee living in his own house or where he does not pay any rent is not eligible for this exemption. Since you are not living in your own house and since you do pay rent, you are eligible for the tax exemption available on HRA.
The least of the following is exempt from tax u/s 10(13A):
a) 40% of salary (50% for Mumbai, Kolkata, Delhi and Chennai).
b) HRA for the period the house is occupied by the employee.
c) The excess of rent paid over 10% of salary.
Suppose we want to show the business income of a person to be less than Rs 1,20,000 to avoid maintaining account books. In such a case, in return form ITR-4, on what basis should we show gross receipts, gross profit, expenses, debtors, creditors, cash balance stock, etc? Is it necessary to show all these items or only those which we are somewhat sure of?
?Ahuja
To relieve some special class of assessees from maintaining a books of accounts, a provision of payment of presumptive tax is made for assessees engaged in the business of – i) Civil construction or supply of labour for civil construction @ 8% of the gross receipts, provided the receipts are under Rs 40 lakh u/s 44AD. ii) Plying, hiring, or leasing goods carriages @ Rs 3,500 per month or part of the month for heavy vehicles and @ Rs 3,150 for other vehicles u/s 44AE, provided the assessee does not own more than 10 vehicles. iii) Retail trade in any goods or merchandise @ 5% of the gross receipts u/s 44AF, where the turnover does not exceed Rs 40 lakh.
It is obvious that you will do well by maintaining books of accounts, if necessary, by taking some professional help.
I have a query regarding arrears of pension received by a widow family pensioner of Punjab State Electricity Board. I have received pension from the board in 4/2008 along with arrears of pension amounting to Rs 2.52,200 w.e.f 12/11/2006 (date of death of my husband). DDO is intent upon deducting the income tax for all the payments received by me in the current year, though I have submitted my income tax statement for the current year availing relief under section 89(1) through form 10(E). The officials of the office are arguing that their chartered accountant is of the opinion that relief is not admissible to the widow pensioner under section 89(1). Please advise on the issue and the action that could be taken against the DDO if he is wrongly deciding the matter.
?Parminder Kaur
The CA of the bank has erred. Section 89 is reproduced verbatim hereunder:
“Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment, which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the assessing officer shall, on an application made to him in this behalf, grant such relief as may be prescribed.”
It is obvious that family pension received in arrears is eligible for the benefit of Section 89.
I retired from service in January 2007, and invested my retirement benefits in a nationalised bank as fixed deposit, earning a quarterly interest of Rs 36,000. I have no other income other than the interest, which I am earning on my fixed deposits. The interest income is withdrawn regularly for meeting my household expenses. I am continuing my PPF account and after investment in the PPF, my balance interest earning are below the taxable limit. The bank is deducting TDS on my interest accruals on the plea that since the interest earned is more than Rs 10,000, I cannot submit form 15H and as such I am required to seek a refund of income tax deducted at source after filling the income tax returns. Please guide in the matter.
?Sukhlal Soni
The bank has erred. The Form-15G/H is necessary only when the interest is Rs 10,000 or more during a financial year paid by the branch of the bank. The question of TDS does not arise when the interest is lower than this amount.
You can file form 15G (presuming you are not a senior citizen i.e. of age 65 years or over) or Form 15H if you are a senior citizen, since your interest income is below the tax threshold of Rs 1,50,000. The bank will not apply TDS on receipt of your form 15G.
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