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Tax questions answered by our experts.


viyankaasii: I am merchant navy nri. I want to invest in equities but not through PIS as the charges are too high which will eat away chunk of my investments. I think of investing through my wife who is a housewife. Is it legal to do like that? If so how much i can invest through her without paying income tax for her. ? Can i give money as gift so that it doesnt attracts tax? How much is the max.permissible amount i can give as gift so that she doesnt have to pay tax?

Balwant Jain

Company Secretary, Bombay Oxygen

As far as amount up to which you can gift to your wife is concerned there is no upper cap and all the gits are tax exempt. However any income which your wife earns on the money so gifted shall be added to your income due to applicability of clubbing provisions. In order to avoid the clubbing of income, you can give interest free loan to your wife and she can make investment in shares. Since this is not your fulltime job, I would advise you to stay away from direct investing in equity and in stead invest in equity oriented mutual funds with good historical performance and belonging to reputed fund house. Please understand that investing in equity is very risky and volatile for short term so unless your time horizon of investing is more than 7-8 years please do not invest the money in equity.

Balwant Jain

Company Secretary, Bombay Oxygen

Whether you can do trading in shares in future and option, being a government employee, depends on your service rules. So in case your service rules allow you to indulge in trading in derivatives, the income earned on such transactions shall be treated as normal income and will be added to your regular income like salary, interest etc.. Though tax will be deducted by your employer from your salary, you will still have to pay the tax on such income at the rate applicable to your either by way of advance tax or self assessment.. Alternatively you can disclose your income from such trading to the employer and request them to deduct higher TDS.

Balwant Jain

Company Secretary, Bombay Oxygen

Taxation of capital gains on redevelopment of a property is new phenomena and just evolving. Though you have demolished your house and handed over the possession of the land to the developer, you will still be able to claim the tax exemption under Section 54. As far as the question as to the number of the houses for which you will get exemption, the law has been amended by finance act 2014 restricting the benefits only for one house unless both the flats which you will get are going to be used as single residential unit. The incidence of capital gains generally gets triggered on the incidence of transfer of the capital gains even if you have not received the sale consideration. So in your case staggering of the receipts of money from the developer is not going to help you in any tax planning under Section 54EC for capital gains bonds. Since the subject of taxation of capital gains on redevelopment of property is not so simple and need to take into consideration various factors, I would advise you to kindly take help from a Chartered Accountants or a tax expert as the stakes are generally very high.

ravi_ritul: i am a salried emp in 10%tax braket. i earned rs. 3,25,000 in FNO segment. what will be my tax laibility on FNO income for fin year 2014-15

Balwant Jain

Company Secretary, Bombay Oxygen

Your income from FNO shall be added to your other taxable incomes as this is treated as normal income and is taxed at normal rate. So the tax on your FNO income shall be payable at the slab rate applicable to you.

hem26ind: Hi, I am a defence pensioner. my total pension is around 13031 pm. also I have FD of Rs 16 lakhs of which monthly interest is being credit to my account around 12466/-pm. what will be my tax liability for FY 2014-15? Also please suggest is there any way to reduce tax?

Balwant Jain

Company Secretary, Bombay Oxygen

Since finance year 2014-2015 is over it is late for me to suggest any measure for you to save tax for that period. As far as calculation of your tax liability is concerned. It is simple add up all your taxable incomes like pension and interest on fixed deposit in your case for the year. Deduct any deductions for eligible amounts under section 80 C and 80 D. Presuming your do not have any other income and do not have anything to claim under Section 80 C, 80 D or any other sections, your total income for the year is Rs. 3,05,964/-. I presume your are not senior citizen. Your tax liability shall be Rs. 5,596/- (Being 10% on the amount in excess of Rs. 2.50 lacs) plus 3% education surcharge. For saving income tax for the current year, you can contribute up to Rs. 1.50 lacs either towards Senior Citizen Saving Scheme and or 5 years tax savings bank FD.

Balwant Jain

Company Secretary, Bombay Oxygen

: For availing the benefit of additional Rs. 50,000/- deduction, you need to contribute toward Tier I account. It is only tier I account, contribution to which are eligible for deduction under Section 80CCD. Yes you can contribute towards your Tier I account yourself. Tier II account is a like a saving account where you can temporarily park your extra savings which you can either withdraw later on or transfer to Tier I account. Opening of Tier II account is optional and not mandatory. Please note withdrawals from Tier I account are generally not permitted before completion of 60 years of age.

Arnav Pandya

Financial Planner

The landlords PAN would not be required since the rent does not cross Rs 1 lakh in the year but it is better to provide this as it would not lead to any problems later on.

sanoj_nambiar: Hi, I am planning to invest about 40k through ELSS mode. This is my first step towards mutual fund. I already realise, that I have made the mistake of not starting it in SIP earlier. I am considering to put it in dividend scheme so that I can recover portion of the amount quickly and average out the risk. My goal is purely tax saving with sufficient liquidity. Does this approach make sense. Can you suggest me good ELSS options Any guidelines on how to evaluate mutual funds based on their portfolio

Arnav Pandya

Financial Planner

The option of choosing the dividend option is appropriate since you have a three year lock in for the investment. The approach of using an ELSS makes sense if you are able to bear the risk and are not worried by the fluctuation in the value due to the movements of the equity markets. Look at long term figures to see how the fund has performed during times both good and bad. In terms of the portfolio see the kind of stocks that it holds and whether they are large cap or mid cap and the sectors where there is a larger exposure.

Arnav Pandya

Financial Planner

There is only one benefit of ELSS funds which is under Section 80C so if the fund that you are considering falls under this category like the SBI Tax Advantage then this can be claimed.

Arnav Pandya

Financial Planner

Long term capital gains tax would be taxable at zero rate which will not entail any liability while the short term capital gains would be taxable at 15 per cent plus cess.

vela4807: Sir, I am 18 years old girl , studying First year BE , My mother and father expired on few months back, their holding around Rs.10 lac in their SB Account. and I will get awaiting for around Rs.240000 p.a Family Pension? My BE degree Expenses around 2 lakh p.a , Then what can i do planning for my future financial planning , and any income tax are paid for me?

Arnav Pandya

Financial Planner

The amount that you get as family pension would be taxable in your hands but this would not entail any tax at the current rates and slabs of taxation. You should ensure that the amount available with you is invested for the long term that will generate income depending upon your requirement and at the same time also lead to some accumulation of wealth.

sivagadoo: Hi, i am 34 yrs old software professional and ctc is 13 laks p.a. i have 1 lack 80c investment and no other investments, i am paying 18k as tax per month. pls help me to invest on good products which will give me tax saving.

Arnav Pandya

Financial Planner

This year you can invest upto Rs 1.5 lakh in various eligible instruments under Section 80C to ensure that there is a deduction from the taxable income. In addition premium paid on health insurance policies is also eligible for a deduction. Depending on your risk taking ability you can choose the appropriate products from either the debt or equity space.

neeraj6333: Sir, I have invested 3600 Rs. in 1993-94 in Deep Discount Bond issued by Sardar Sarovar Narmada Nigam ltd. I have received redemption amount 50,000 in 2014-15. My query is that this amount will come under other income and submit ITR-1 or will be treat as long term capital gain and submit ITR-2. If it will come under LTCG then in which manner I will pay tax and what is correct? 1)When I include in my total income I come under 20% tax slab 2) or I should exclude it from total income and calculate tax separately on salary and on redemption amount 10% or 20% (with indexation). your guidelines are deeply required. Plz..

Arnav Pandya

Financial Planner

Taxation of deep discount bonds guidelines state that if the bond is redeemed then the difference that would arise would be taxable as interest income.

SwapR: I\'m 31 years old State govt. employee, earning is 5.52 p.a. after deduction At this moment, how can I save tax..?? and how can I invest..?? Please assist me..

Arnav Pandya

Financial Planner

You should ensure that several deductions available in the form of Section 80C where a sum of Rs 1.5 lakh is available plus under Section 80D for payment of health insurance premium is taken. Also if you have a housing loan then Rs 2 lakh of interest paid during the year would be available as a deduction and hence all these should be taken if these are possible.

Arnav Pandya

Financial Planner

Amount gifted to a spouse and then invested would result in the income arising from this being added to your income. There is no implication from the first gift to the spouse but if this leads to some income then this would be clubbed.

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