I am an LIC agent since 1973. My date of birth is April 12, 1950. I am entitled to the gratuity as given by LIC to its agents after completion of 15 years in agency. I have received Rs 2 lakh as gratuity but LIC has deducted an income tax of Rs 20,000. Is gratuity taxable? Can LIC deduct income tax on gratuity payable to its agents?

Jayanta Kumar Dey, Chetla

Gratuity is exempt from tax only if there is a relationship of employer and employee between the payer and the payee. If such a relationship does not exist, the exemption shall not be available. In your case, as well for other LIC agents, the gratuity payable by the corporation does not qualify for exemption under the Income Tax Act as agents are not employees of LIC. So, LIC has done the right thing by deducting TDS on the gratuity paid to you.

Income limit

I am 68-years-old and I have been filing IT returns since 1997-98 through a chartered accountant firm. My annual income in the last financial year was Rs 1,76,370 after all deductions under Section 80C. I want to change my tax return preparer as I am living alone and have been suffering from ill health. Can I stop filing IT return because the exemption limit for senior citizens has been increased to Rs 3.5 lakh?

Suresh Thakker, Calcutta

The exempted income limit for senior citizens is Rs 2.5 lakh. If your annual income after all deductions is less than Rs 2.5 lakh in financial year 2011-12, you can stop filing returns. Filing income tax return is mandatory only when there is a taxable income or there is a tax refund claim.

Liability share

My brother and I are owners of a house that we are going to sell for Rs 34 lakh. We have booked two flats for Rs 23 lakh and Rs 17 lakh. What will be our capital gains tax liability?

Dilip Kumar De, Calcutta

The capital gains tax liability will be commensurate with the ownership share of each of you in the property you are selling. If you two brothers have equal shares in the property, the capital gains tax liability will be 50:50.

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