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Your tax queries answered

| 12/5/2011 11:28 AM Monday

I received a gift of Rs 100000 each from my father, mother and my father’s brother last year. Are they liable to pay gift tax, or am I liable to pay any tax thereon? Please advise.
-    Hemal Chheda, Vasai, Thane


Gift Tax has been repealed, and there is no tax on gifts made by a person any more. However, gifts received in the aggregate of Rs 50000 or more from non-relatives are treated as income under Section 56(2)(vii) of the Income Tax Act, 1961. In your case, the gifts are received from relatives, and hence, no tax is payable either by you, your parents or your father’s brother.

Has the government increased the maximum investment limit in respect of Public Provident Fund (PPF) from Rs 70000 to Rs 100000?
bharatagy@gmail.com


As per the latest notification issued by the government, the limit of investment in PPF has been increased to Rs 100000. In addition to this, the government has also increased the rate of interest for PPF, along with some other amendments.

I have sold a residential house at Mumbai on September 16, 2008, and invested the taxable capital gains thereon in the Capital Gains Deposit Scheme as per the provisions of the Income Tax Act, 1961. However, till date, I have neither purchased a new residential house nor constructed a new house as required by Section 54 of the said Act. What is the consequence of such non-investment in a new house?
-    Prakash Kotak, Chowpatty, Mumbai


If the investment has not been made in accordance with the provisions of Section 54, you will be charged tax in respect of the capital gains in the year in which the period for investment has expired. You will be allowed to withdraw the amount after the tax thereon is paid.

I was born on September 15, 1931, and attained the age of 80 years on September 14, 2011. I understand that there is a new slab created for senior citizens who have attained the age of 80 years, whereby the basic exemption limit is Rs 500000. Will I be eligible for the new exemption of Rs 500000 for the financial year ended March 31, 2012 (relevant to AY 2012-13), as I was not of 80 years throughout the year, or will I be eligible only in the next financial year (relevant to AY 2013-14)?
-    H.K. Gupta, Andheri (West), Mumbai


If a person attains the age of 80 years on any day of the financial year (in your case, financial year ended March 31, 2012), then he/she will be treated as very senior citizen, and will be eligible for the new slab of basic exemption upto Rs 500000 for the said financial year (in your case, financial year ended March 31, 2012). Thus, you will be eligible for this new slab even though you were not 80 years of age for the whole year.

KEY POINTS:
  • Gift Tax has been repealed, and there is no tax on gifts made by a person any more. However, gifts received in the aggregate of Rs 50000 or more from non-relatives are treated as income under Section 56(2)(vii) of the Income Tax Act, 1961.
  • As per the latest notification issued by the government, the limit of investment in PPF has been increased to Rs 100000.
  • If the capital gains from the sale of residential property have not been invested in accordance with the provisions of Section 54, you will be charged tax in respect of the capital gains in the year in which the period for investment has expired.
  • If a person attains the age of 80 years on any day of the financial year, then he/she will be treated as very senior citizen, and will be eligible for the new slab of basic exemption upto Rs 500000 for the said financial year.

 

Find More Articles on: DSIJ Magazine, Tax Queries, Personal Finance, Tax

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