Monday, April 10, 2006
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IN TODAY'S PAPER
Since 1st March, 1999
Does the interest on retirement benefits such as gratuity, provident fund and leave salary fall under the purview of income-tax, particularly when the beneficiary is 60 years of age' If yes, how is the tax calculated'
Diptimoy Ghosh, Calcutta
A person below 65 years is not considered a senior citizen for calculation of income tax. The extent of tax exemption available to you on your retirement benefits will depend on whether you are a government or non-government employee. The retirement income from such instruments are fully tax-exempt for government employees. But for non-government employees, there are limits. For example, a gratuity benefit of up to Rs 3.5 lakh or half a month’s salary for each completed year of service, whichever is less, is tax exempt for a non-government employee. The entire gratuity income and leave salary is totally tax exempt for government employees. But for non-government employees, it is the least of the following: 10 months’ average salary or Rs 2,40,000. Provident fund and superannuation fund benefits are, however, fully tax exempt.
Is a gift (in dollars) from a son working in the US to his father exempt from income tax' If so, under which clause'
Dr S.K. Sen, Calcutta
The gift tax act has been withdrawn. Hence anyone, non-resident Indian or otherwise, can give a tax-free gift to a blood relation. But when the donor is not residing in India and the gift is in foreign exchange, the same will come under the purview of the Foreign Exchange Management Act. You should send a formal acknowledgement and ‘thank you’ note to your son. Make sure, your son replies to your letter. Keep the letters as documents of the gift.
Senior citizens’ scheme
Are deposits made under the Senior Citizens Savings Scheme deductible up to Rs 1 lakh under section 80C'
Arun K. Chatterjee
Deposits in Senior Citizens Savings Scheme have no tax benefit. These don’t fall under section 80C.
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