Thursday, January 18, 2018

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Personal Finance

Posted at: Jun 12, 2017, 12:30 AM; last updated: Jun 12, 2017, 1:48 AM (IST)TAX ADVICE

Two nominations not must for PPF

S C Vasudeva

I have a PPF account since 1976 which I am still operating and has a good amount to credit. As per advice available at the time of opening the account, nomination was made as under:

"Wife (now a senior citizen), adult son (now in his forties), now an NRI with stipulation either or survivor".

Is the above nomination valid? The bankers are ignorant and they consider PPF as a burden.

Further, is it necessary to have joint nominees?— krishan dev uppal

Clause 12 of Public Provident Fund Scheme 1968 deals with the nomination and repayment of balance in Public Provident Fund account after death of the subscriber. The said clause permits nomination of one or more persons to receive the amount standing to the credit of the subscriber in the event of his death. The said clause does not contain any prohibition with regard to the nomination of a person who is a non-resident Indian.  Therefore, the nomination made by you seems to be valid and there should not be any problem for release of the amount to the nominee after death of the subscriber. It is not necessary to have two nominations.  However, it is preferable to do so.

The interest income on all my FDs in banks is more than Rs 1 lakh.  I would like to know whether I will have to pay the income tax on Rs 1 lakh or Rs 90,000. — avinash joshi

A deduction of Rs 10,000 is allowable from the total income where the case of an individual or a HUF where any income by way of interest on deposit in a savings account with a banking company is included in the total income of such an individual or HUF.  It has been stated by you in the query that the interest income earned by you is on fixed deposits with the bank. Therefore, deduction of Rs 10,000 as provided under Section 80TTA of the Income-tax Act 1961 (The Act) would not be allowable in such a case.

In response to the query published in The Tribune on May 8, 2017, your have mentioned that a senior citizen with an income of Rs 5,00,000 and rebate of Rs 1,50,000 u/s 80C and u/s 87A will have to pay Rs 2,575 as income tax for the assessment year 2018-19.  But in my opinion, it should be as under:

Total income: Rs 5,00,000

Rebate u/s 80C: Rs 1,50,000

Balance taxable amount: Rs 3,50,000

Standard deduction: Rs 3,00,000

Balance amount: Rs 50,000

Tax @5%: Rs 2,500

Rebate u/s 87A: Rs 2,500

Tax payable: Nil

Kindly guide whether I am right or wrong. — satinder vir singh

Income-tax computations given in the reply to the query published on 8.5.2017 were for assessment year 2017-18. This aspect has been explained to the querist as well as to other persons who raised this issue.  It was assumed that the computations are being sought in respect of assessment year 2017-18 on account of the reasons explained in the detailed note sent to the querist.  Computations given by you in respect of total income of Rs 5,00,000 of a senior citizen who has claimed a rebate under Section 80C of the Act to the extent of Rs 1,50,000 would be in accordance with the calculations made by you in your query.


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