Pension query

• After my retirement, my company had deposited a lump sum amount in LIC from which I receive a monthly pension. Is this income taxable or exempt like other payout from LIC?

A. Ghosh, via email

• While contributions to certain annuity schemes of LIC are eligible for deduction, the monthly pension received is taxable. For example, a deduction of up to Rs 150,000 is allowed for any amount deposited under annuity plans, such as Jeevan Nidhi and New Jeevan Suraksha. While the pension received is taxable, if the amount is commuted, exemption is available under section 10(10A) of the I-T act.

 

Tax in instalments

• I had sold my ancestral home in April 2015. There was substantial capital gains, which cannot be covered fully by investing in 54EC bonds. As I have to pay capital gains tax on the balance, can I pay the tax in instalments through September, December and March? Or, do I have to pay the entire amount in September?

Tapati Banerjee, New Alipore

• You can pay advance tax on all constituents of income, including capital gains. Individual assessees can pay 30 per cent of the advance tax on or before September 15, 60 per cent (reduced by any amount paid earlier) on or before December 15 and the remaining on or before March 15. You can refer to section 211 of the income tax act for instalments and due dates of advance tax.

 

Face value tweak

• A year ago I had invested Rs 50,000 in HDFC Liquid Fund (direct plan-growth option). Its value is Rs 55,283.87 as on August 18, 2015. The fund house has decided to change the face value of the units from Rs 10 to Rs 1,000 for units offered under the regular and direct plan option, from August 30, 2015. Am I a loser or a gainer?

J. Ghosh, via email

• Asset management companies change the face value of mutual fund units to lower the volatility in the NAV and reduce distortions while computing annualised returns. When the face value increases, the number of units decreases. So, the investment value remains unchanged. You do not stand to gain or lose anything from this change.

 

If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abp.in, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.