Mukesh Patel.in
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PENSIONS & SOCIAL SECURITY FROM US & UK TAX EXEMPT!

Family Pension received by a Widow is entitled to Standard Deduction at 33.33%, subject to a maximum of Rs.30,000

  Today’s write-up deals with some interesting issues relating to taxability of dues, family pension etc. received by legal heirs of a deceased employee, receipt of commuted pension by specified employees and Public Pensions/Social Security payments received from abroad by Indian Residents.   
 

LEAVE SALARY TO LEGAL HEIRS EXEMPT!

       Under Letter No.35/1/65-IT(B) dated 5-11-1965, the Central Board of Direct Taxes (CBDT) has clarified that the leave salary paid to the legal heirs of a deceased employee in respect of privilege leave standing to the credit of such employee at the time of his/her death is not taxable as salary.  Similarly, under Circular No.309 dated 3-7-1981, the CBDT has also clarified that receipt of cash equivalent of leave salary, which the deceased Government employee would have got if he had gone on earned leave, by the family of the deceased employee, is not liable to income-tax. (more…)

TAX STIMULUS FOR MEDICAL INSURANCE

Section 80D allows deduction of Rs.15,000 for covering insurance for own family & additional Rs.15,000 for premium paid for parents

Medical Insurance is becoming increasingly popular in India with the increasing cost of medical treatment and hospitalization expenses. The benefit of having a medical insurance is that by making a small payment of insurance premium, the proposer can cover the cost of medical treatment and hospitalization of himself and his family members in case of need.  

    Section 80D of the Income-tax Act provides for deduction out of the gross total income of the taxpayer in respect of such medical insurance premium paid. The popular medical insurance policy offered by the General Insurance Corporation of India is the ‘Mediclaim Policy.’ Several private insurance companies recognized by the Insurance Regulatory & Development Authority (IRDA) also offer a variety of medical insurance products, the premium payment of which is eligible for deduction under Section 80D. (more…)

WEALTH-TAX SHELTER FOR RESIDENTIAL HOUSE!

One house or an open plot of land of upto 500 sq.mtr. is treated fully exempt from Wealth-tax irrespective of its value!

Under the present scheme for levy of Wealth-tax, all ‘productive assets’ are excluded from the definition of the term ‘assets liable to Wealth-tax.’ Accordingly, in respect of house property, the following have been treated as assets liable to Wealth-tax:

  • Any building or land appurtenant thereto, whether used for residential or commercial purpose or for the purpose of maintaining a guest house.
  • A Farm House situated within 25 kms. from the local municipal limits. (more…)

GIFTS FROM RELATIVES TAXFREE!

No stamped document required for gift of movable property,

But it is advisable to keep letter of gift from donor on record!

Several AM readers poured in their questions in response to the article last Monday on gifts and income-tax liability. Some of these queries which touch issues of popular interest are replied hereunder:

 LIST OF RELATIVES COVERED

Query:  Your article states that gifts received by an individual from his relative are treated as exempt, even beyond Rs.50,000 in a year. Can you please elaborate which relatives are covered for this purpose?

 Reply: One of the important exceptions provided under Section 56 of the Income-tax Act, in regard to taxing gifts as income, is in respect of sums received by any individual from his/her relative out of natural love and affection.  For this purpose, the term ‘relative’ has been defined to include the individual’s spouse, brother or sister of the individual or spouse, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual or spouse and finally the spouse of any of the above-referred persons.  (more…)

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