I have been contributing to Recognised Provident Fund maintained by my employer since July 2011. In October 2015, I left the organisation and withdrew the deposited amount. Is the withdrawal taxable?
— Ravish Srivastava
As per the provisions of Income Tax Act, contribution to recognised provident fund will not attract any tax liability in the following cases:
a) If the employee has rendered continuous service with his employer for a period of 5 years or more. For the purpose of calculating 5-year time-limit, service rendered with the previous employer shall be included, if the previous employer also maintained recognised provident fund and the provident fund balance of the employee was transferred by him to the current employer.
b) If the employee has resigned before completion of 5 years but he joins another employer (who maintains recognised provident fund and provident fund money with the current employer is transferred to the new employer).
c) If the employee has been terminated because of certain reasons which are beyond his control (e.g., ill health of the employee, discontinuation of business by employer, completion of project for which the employee was employed, etc).
Therefore, if an employee makes withdrawal before continuous service of 5 years for reason other than the cases given above, such withdrawal shall be taxable.
Last month I retired from an MNC after working for almost 35 years. My colleagues gifted me a sum of R25 lakh. Is the gift amount taxable?
—Himangshu Shetty
As per the Income Tax Act, if an individual receives any amount as gift exceeding R50,000, then whole amount of such gift will be taxable. This is subject to certain exemptions like gift received from close relatives. In the present case, the entire amount received by you from colleagues shall be taxable under ‘income from other sources’.
I have several LIC policies in my name and have been paying premium of more than the eligible limit of R1.5 lakh.
Recently, I came to know that the limit of deduction under section 80C has been increased up to R2 lakh. Can I claim tax rebate on premiums of R1.9 lakh.
—Amit Goyal
There is no change in the deduction limit under section 80C, which is up to R1.50 lakh. However, there has been an amendment in section 80CCD where under section 80CCD (1B) an individual employee can claim additional deduction up to R50,000 by contributing towards a notified pension scheme. Since both the provisions are separate you can claim maximum deduction up to R150,000 only for payment towards LIC premiums under section 80C.
I made a mistake while filing my income tax return for FY 2013-14. I forgot to claim TDS deducted by the bank on my fixed deposit interest in the return. What should I do?
— Rajesh Kumar
You can rectify the mistake /omission by filing a revised return for the FY 2013-14 before the expiry of two year from the end of the relevant financial year (i.e. 31.03.2016) or before the completion of assessment, whichever is earlier.
I am a partner in a firm and have received interest on my capital contribution. However, I later came to know that TDS was not deducted on such interest paid by the firm. What will be the consequences on the firm?
— Ketan Aulakh
Interest other than interest on securities is subject to deduction of tax at source under section 194A of the Income Tax Act. However, specific exemption has been provided in respect of income credited or paid by a firm to a partner of the firm. As such, no interest or penal consequence will arise in hands of your firm.
The writer is founder of RSM Astute Consulting Group
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