INDIA: Expert Advice on Tax Matters of Seniors

INDIA: Expert Advice on Tax Matters of Seniors

Financial Health Check New Delhi (THE SUNDAY EXPRESS), June 12, 2005 I am a senior citizen aged 72, getting a monthly rent of Rs 25,000 from a private limited company. By submitting form 15-H can I escape TDS? D V Kohli

Income by way of monthly rent of Rs 25,000 per month in your case exceeds Rs 1,20,000 as stipulated for TDS u/s 194I. Since the amount of Rs 3,00,000 far exceeds the basic exemption of Rs 1,85,000 for senior citizens, section 194I does not permit any escape from TDS by filing any form like 15-H. Thus you will have to pay TDS on the entire amount and claim it as a return when you file your return of income.

I am 65 years old and have been retained by a company to manage their affairs of property, law and administration as a retainer. I am paid a retainership fee every month and they deduct tax from the fee. At the end of the year they issue a TDS certificate in form 16A so that I can avail standard deduction of Rs 30,000. However, I am advised that it is better for me to claim deductions in respect of expenses incurred for maintaining the retainership. Which method will be more beneficial from the tax angle?

Keeping in view the changes effected by the Finance Act, 2005 to the Income Tax Act 1961, where inter alia standard deduction from salary u/s 16 is deleted, you would certainly be better off by offering your income under the head ‘Business and Profession’ rather than under the head ‘Salaries’ in order that you are eligible to claim the expenses indicated by you. However, you will have to rework your association with the company by entering into a fresh agreement describing you as a consultant rather than an employee.

I’ll be grateful if you could kindly advise me how PPF accounts can be closed. My two sons have PPF accounts which mature in 2011. However they have migrated abroad some years ago and I have been keeping their accounts running. I am past 76 years and may not be able to continue doing this, nor would it be feasible for the sons to operate it or even remember to do so regularly. Hence my question on whether there is some condition that would suffice to have the accounts closed. N H Pereira

Your query makes interesting reading. While that there is a cumbersome procedure for closing PPF accounts prematurely, we are inclined to suggest that the PPF accounts of your two sons should be kept alive either through your efforts or by remittance from outside India by your sons into their PPF accounts in India, more so when the year 2011 is only about five years away. Here is wishing you a very long life.

I have taken a residential house which is under construction. I have also take a loan from HDFC for the same. I am paying a Pre-EMI. I would like to know the treatment of this pre-EMI in income tax, can I claim a rebate for the same upto Rs 1.5 lakh on interest? Manoj Kotwani

Yes, pre EMI interest is also eligible for a deduction under section 24 of The Income Tax Act, while computing your income under the head ‘House Property’. However, your deduction up to Rs 1.5 lakh per year towards interest will have to be accumulated until such time your property is completed. Such accumulated amount will be granted to you over five years in equal installments beginning with the year of completion of construction of your flat.

Kanu Doshi, Dean-Finance of Welingkar Institute of Management, has given his opinion. Questions on insurance, tax, investment and financial planning may be sent to ymm@expressindia.com for getting advice from a panel of experts URL: http://www.indianexpress.com/full_story.php?content_id=72460

© 2005: Indian Express Newspapers (Bombay) Ltd.