Tax queries: Contribution to NPS can lower tax liability
Dec 14, 2017, 11.24 AM IST
Dilip Lakhani, Senior Chartered Accountant, answers queries from our readers on income tax and other levies.
I am working as a general manager in a private company having salary package of Rs 33,50,000. The break-up is as follows: basic Rs 22,00,000, taxable allowances Rs 2,50,000, HRA Rs 5,00,000, tax free allowances Rs 1,00,000, contribution to PF Rs 3,00,000. Can I avail any benefit of pension schemes announced by the government to reduce the tax liability? — Rohit Patel
You can ask your employer to contribute up to Rs 2,20,000, being 10% of your basic salary to National Pension Scheme and reduce your taxable allowance to that extent. You will get deduction of the full amount deposited under Section 80CCD(2) of the Income Tax Act. You can also contribute additional amount up to Rs 50,000, to the National Pension Scheme, if cash flow permits, and claim deduction under Section 80CCD (1B) of the I.T. Act.
My grandfather acquired a residential flat in 1978 for Rs 10,00,000. He expired in 1982. My father inherited the flat and gifted it to me in 2009. I have sold the flat on July 1, 2017 for Rs 5 crore. I have purchased another residential flat on October 1, 2017 for ?4 crore. Will I be liable to pay any capital gain tax? — Rita Pawar
For computing Long Term Capital Gains (LTCG) tax liability on transfer of the residential flat you will have to determine the fair market value (FMV) of the flat as on April 1, 2001. FMV will be treated as your cost of acquisition as your grandfather had acquired the flat in 1978. You will be entitled to take benefit of indexation under Section 48 of the I.T. Act. The indexed cost of acquisition will be reduced from the sale consideration of Rs 5 crore and the remainder will be treated as LTGC. You can claim deduction under Section 54 in respect of the new flat purchased while computing the taxable LTCG. If any surplus till remains you will have to pay tax at 20%.
Please send your queries on Stocks to et.stocks@timesgroup.com; Mutual Funds to et.mfs@timesgroup.com Tax to et.tax@timesgroup.com Insurance to et.insurance@timesgroup.com Realty to et.realty@timesgroup.com
I am working as a general manager in a private company having salary package of Rs 33,50,000. The break-up is as follows: basic Rs 22,00,000, taxable allowances Rs 2,50,000, HRA Rs 5,00,000, tax free allowances Rs 1,00,000, contribution to PF Rs 3,00,000. Can I avail any benefit of pension schemes announced by the government to reduce the tax liability? — Rohit Patel
You can ask your employer to contribute up to Rs 2,20,000, being 10% of your basic salary to National Pension Scheme and reduce your taxable allowance to that extent. You will get deduction of the full amount deposited under Section 80CCD(2) of the Income Tax Act. You can also contribute additional amount up to Rs 50,000, to the National Pension Scheme, if cash flow permits, and claim deduction under Section 80CCD (1B) of the I.T. Act.
My grandfather acquired a residential flat in 1978 for Rs 10,00,000. He expired in 1982. My father inherited the flat and gifted it to me in 2009. I have sold the flat on July 1, 2017 for Rs 5 crore. I have purchased another residential flat on October 1, 2017 for ?4 crore. Will I be liable to pay any capital gain tax? — Rita Pawar
For computing Long Term Capital Gains (LTCG) tax liability on transfer of the residential flat you will have to determine the fair market value (FMV) of the flat as on April 1, 2001. FMV will be treated as your cost of acquisition as your grandfather had acquired the flat in 1978. You will be entitled to take benefit of indexation under Section 48 of the I.T. Act. The indexed cost of acquisition will be reduced from the sale consideration of Rs 5 crore and the remainder will be treated as LTGC. You can claim deduction under Section 54 in respect of the new flat purchased while computing the taxable LTCG. If any surplus till remains you will have to pay tax at 20%.
Please send your queries on Stocks to et.stocks@timesgroup.com; Mutual Funds to et.mfs@timesgroup.com Tax to et.tax@timesgroup.com Insurance to et.insurance@timesgroup.com Realty to et.realty@timesgroup.com
