My mother-in-law gifted my wife Rs 30,000. My wife wants to deposit this amount in a joint account with me. I’ll be the first account holder so that we get the higher interest rate for senior citizens. Will I have to pay the tax on the interest income and show the same in my tax return? Will my wife also have to pay tax?

Basudeb Sarkar, Konnagar

Yes. You will have to pay tax, but not on the amount received as gift. You will have to pay a tax on the interest income on the money. The tax liability of your wife will fall on you if she is a housewife. However, if she doesn’t have any other income or her annual income is less than the threshold limit for women, she won’t have to pay any tax.

Benefits of PAN

What are the advantages and disadvantages of a PAN holder? Is a PAN holder bound to submit income tax return even if the annual income is less than the threshold limit?

Biplab Roy, Ichapur

The advantages of holding a PAN are many. It has already been made mandatory to have a PAN for opening a demat account and for trading in shares and mutual funds. This is also treated as identity proof. The government is thinking of making PAN mandatory for opening a bank account in the near future. However, it doesn’t serve as address proof.

g return is not mandatory for persons having an annual income less than the threshold limit.

Gains from Ulips

Last year, I invested in a unit-linked insurance plan of the LIC. I also claimed tax deduction on the premium paid in the financial year 2006-07. How would I take into account the loss or gains arising out of the investment in subsequent years? Is the amount received on maturity or surrender of the policy taxable?

Subrata Kundu, Sheoraphuli

vestments in a ULIP cannot be withdrawn before the initial three years. So there is no question of gain or loss of the investment in the first three years. After that, whether you withdraw or hold on to the investment till maturity, the amount received is tax-free under the current provisions of the income tax act.

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 700001.