| Is the withdrawal from National Savings Scheme taxable? Initially, the scheme was introduced as a tax savings instrument. But my post office has deducted tax at source at the rate of 20 per cent? |
P.K. Kundu, North 24 Parganas |
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| The National Savings Scheme was introduced in 1987 and it permitted an annual deduction under Section 80CCA with exemption for interest as well. The amount, including interest, was taxable at source on withdrawal under Section 194EE at the rate of 20 per cent, subject to a self-declaration of nil tax liability in Form 15G or Form 15H. Till assessment year 2005-06, there was an exemption limit of Rs 50,000 on withdrawal that was increased to Rs 1 lakh from assessment year 2006-07. Now depositors other than senior citizens can submit Form 15G for non-deduction of tax up to withdrawals of Rs 1 lakh. |
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| I inherited some agricultural land. Subsequently, I sold a part of it. What would be the capital gains tax implication? |
Chandra Das, Garia |
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| A plot of land qualifies as agricultural land if it is not situated in an area within the jurisdiction of a municipality, municipal corporation, notified area committee, town area committee or a cantonment board, and does not have a population of 10,000 or more. Also, the land must not be situated within 8 km from the local limits of any municipality or a cantonment board. If, by the criteria listed above, the land is an agricultural plot, it will not form part of a capital asset and so there will be no capital gains on the sale of such land. The plot should have been used for agricultural purposes, such as buying new agricultural land within two years from the date of sale. If not, the difference between the capital gain and the new asset bought with the sale proceeds will be chargeable as capital gains and the tax will be computed accordingly. The new asset purchased cannot be sold within a period of three years. If the amount of capital gain is not utilised for the purchase of new agricultural asset, the amount may be deposited in the Capital Gains Account Scheme (CGAS) of any specified bank. |
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| If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001. |
