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‘Which ITR Should I File?’

Anil Rego, CEO, Right Horizons (external link), answers your income tax queries.

M Chandrasekaran: I am a retired banker and I have invested a part of my retired funds (15 lakh) in a bank in the name of my cousin sister (my mother’s younger sister’s daughter) jointly with me as the second name. She is a house wife and has no other investments/ or interest income other than this 15 lakh. She is also a senior citizen.

Will there be any problem for her regarding filing if IT returns every year, since she will be getting only around 1.75 lakh as interest in her account every year which I assume is below the threshold limit.

Anil Rego: Under Income Tax Act of 1961, the interest earned on FD is added under ‘Income from other sources’ and it will be taxed as per the available tax rates. Usually when the interest earned exceeds Rs 10,000 for a financial year, the bank deducts 10% TDS incase you have provided PAN details.

If you have not shared PAN, the bank will deduct 20%.

Since your cousin is a senior citizen, there is an exemption on interest up to Rs 50,000. Since the income will be above Rs 50,000, the bank will deduct TDS. You can claim refund on this by filing income tax returns for her or you would need to submit form 15H with instructions to not deduct TDS with a declaration that her income is below the taxable limit.

MADANLAL GUPTA: I am regular Rediff reader. Sir, 

1) I am earning through share trading, my income is up to 5 lakh. Please advise which ITR form I have to file.

2) And if my income is with salary and share trading up to 5 lakh, then which ITR form I have to file.

Anil Rego: In both the cases you can use ITR 2 to file your tax returns.

ITR 2 is used to file tax when you have income from salary, income from house property, income from capital gain and loss (in your case shares), foreign income, etc.

Kanyalal: I have paid Single Premium of Rs 100,000 for my son’s LIC policy in the year 2012. In the year March 2022, the policy matured for Rs 200,814 and bonus of Rs 12,354. The entire amount was re-invested with additional premium amount of Rs 76,375 as single premium under plan of 917 for 25 years of LIC.

Will the difference amount of Rs 100,814 with bonus amount of Rs 12,354 attract tax? If so, under normal tax rate or LTCG?

Will the entire amount of Rs 289,543 entitled U/s 80C or only differential premium amount of Rs 76,375 be considered U/s 80C?

Shall be thankful for your views.

Anil Rego: Here you have not mentioned the type of policy (ULIP / Traditional) for us to give a detailed analysis.

For life insurance plans issued after April 1, 2012, the exemption from tax on single premium life insurance is valid only when the premium is less than 10% of the total sum assured.

Now, if the policy is taken before April 2012, you could avail the exemptions under Section 10D if the premiums paid in a single year during the policy term are not more than 20% of the sum assured. You will need to show the entire maturity proceeds in your return if taxable.

The entire premium of a life insurance plan is eligible for a tax deduction as per Section 80C up to a maximum limit of Rs 1.5 lakh. 

You can find more of Mr Rego’s answers here.

Note: The questions and answers in this advisory are published to help the individual asking the question as well the large number of readers who read the same.

While we value our readers’ requests for privacy and avoid using their actual names along with the question whenever a request is made, we regret that no question will be answered personally on e-mail.

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