I have a question regarding payment of PPF deposit after the death of the depositor. The nominee wants to withdraw the amount with interest after four years. How much time can be taken by nominee for withdrawal?

D.N. Aggarwal

On the death of a subscriber, the balance in the PPF account is paid on demand to his nominee or successor. However, the balance, if not withdrawn, continues to earn tax-free interest. No partial withdrawals are permitted. It is risky for the nominee to continue the account because the nominee cannot appoint a nominee..

My daughter after getting custody of her minor child after legal divorce received some amount from the father of the child to be kept in term deposit for meeting upbringing expenditures out of the interest received on that term deposit. The term deposit is in the name of the minor child under guardianship of her mother. The money is to be kept in term deposit till the minor attains the age of majority. Mother of the child has her salary income also which amounts to her taxable income.

Kindly clarify whether this amount of interest received on term deposit in the name of minor under guardianship of her mother and meant for her upbringing expenses shall be included in the taxable income of her mother or have some exemptions of income tax because of such specific circumstances

Ravinder

For arriving at the taxability of this amount, note that any diversion of income by overriding title is taxable in the hands of the ultimate beneficiary whereas application of income is taxable in the hands of the recipient.

Income received from property charged under a court?s decree with maintenance allowance to a dependent and spent on maintenance is diversion of income at source and therefore, taxed in the hands of the dependent ? Raja Bejoy Singh Dudhuria v CIT [1933] 1ITR135 (PC). On the other hand, income from property, though paid as maintenance allowance under a decree of court (without maintenance being a charge upon the property yielding the income) is application of income and therefore, chargeable to tax ? CIT v Sitaldas Tirathdas [1961] 41ITR367 (SC).

I have invested some money in Indian mutual funds through a financial consultant for the past couple of years. This year my consultant is demanding a fee of Rs.60,000/- as teh Sceurities Exchange Board of Indid (Sebi) has instructed them to do so. Is this a fact? If so is there any alternative method to get around it. So far I have made 15% profit from last three years. I have not withdrawn any investment. If I withdraw I have to pay income tax, and if I bring back money to Canada I would incur a loss due to difference of exchange. I would appreciate any suggestions from you.

Gopal Koushik

Mutual funds used to charge an entry load to the investors and pay the distributors their commission for bringing the business into their fold. The average rate of such entry load for equity funds was around 2.25%. However for new fund offers or for tax saving schemes, the percentage used to be higher. Now Sebi has ordered MFs not to charge any entry load for rewarding the distributors. Sebi desires the distributors should collect their rewards from the clients directly. Your financial consultant was getting his compensation from you indirectly without you realising that the entry load charged to you by the MF was essentially for paying him his commission. Now Sebi has closed this channel and asked the consultants to negotiate with the client and collect their fees directly from them based upon their service level.

My son is a NRI living in London and very recently bought a flat in Mumbai. He took a loan from LIC housing finance limited and pays the EMI through a NRE account in India. He is still an Indian citizen and holds an Indian passport. I wanted to know if he gives that flat on rent can the rent be deposited back into the NRE account as the finance of the flat is through NRE account only

?Moghe

The rent cannot be credited to your NRE account but most certainly may be credited to his NRO account. Note that such rent would be subject to Indian income tax. Income tax return needs to be filed if his Indian income including the rent is more than Rs 1,60,000.

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