I am currently working for a petroleum company in West Asia. I am enjoying the NRI status for the last two years. My salary income is tax-free here and I want to remit some amount to my parents in India. Will it be taxable in their hands or mine?

? Amit Sartaj

In case of any sum received without consideration (i.e. gifts) in excess of R50,000 in a year by an individual, the whole amount is liable to income tax under Section 56(2)(vi) of the Income Tax Act. However, exemption is given for gifts received from specified relatives, including any lineal ascendants or descendants of the individual. As such, the remittance will not be taxable in the hands of your parents. Also, as you have earned the income outside India and you are an NRI, such remittance to India is not taxable in your hands in India.

I am a self-employed person residing in a rented property in Mumbai and pay R8,000 as rent. I do not own any residential property. Can I claim deduction for the rent paid?

? Sajan Shah

Self-employed individuals can claim deduction on rent paid for residential property under Section 80GG. It is necessary that your spouse, minor child or any HUF which you might be a part of should not be owning a house in Mumbai (i.e. your current place of residence). The deduction is available for least of the following: R2,000 per month, 2.25% of the total income or the excess of the actual rent paid over 10% of the total income.

Recently, I made a fixed deposit of R2.5 lakh in a nationalised bank. The annual interest will be around R20,000. The bank said the tax will be deducted on the whole interest amount and not on the amount exceeding R10,000. Is that correct?

? Sudhakar Rao

The banker?s view is correct. Tax will have to be deducted at source on the interest of R20,000 and not on R10,000. As per Section 194A, tax needs to be deducted at source (TDS) on interest other than interest on securities. The provision clearly states that no TDS should be deducted if the interest is less than R10,000 during the financial year. But TDS wil be deducted on the whole interest once it exceeds R10,000.

I have not received the salary for January to March 2011 from my company due to cash-flow issues. Do I have to consider the same in my return or submit the return only for the salary actually received?

? Sunder Rajan

Salary will be chargeable to tax based on salary due during the previous year, whether received or not. Secondly, salary received in the previous year, whether due or not, and any arrears of salary paid or allowed in the previous year, provided that the same is not chargeable to tax in earlier years, will be considered. In the current case, the entire salary will be chargeable to income tax in your hands.

n The writer is founder, RSM

Astute Consulting Group

n Send your queries at fepersonalfinance@expressindia.com