I-T return must for senior citizens if income above Rs3L

SC Vasudeva

I am a salaried person. My mother is aged above 60, a housewife and has no source of income. She has a bank account in her name. If in a financial year, I transfer up to Rs 5 lakh in her account and she earns some interest on that, what would be her tax liability? In what case she is required to file income tax return? — Amitabh Vishesh

Interest earned on a sum of Rs 5 lakh which you intend to deposit in your mother’s account who is a senior citizen, would be taxable in case her total income exceeds Rs 3 lakh, being the maximum amount up to which tax is not payable by a senior citizen for assessment year 2015-16 (financial year 2014-15). In case her total income exceeds the aforesaid limit, she would be required to file her tax return and in case it does not, she would not be required to file the tax return.

It is learnt that whole of amount of interest allowed as FDs/RDs and savings account in the co-op societies in Himachal Pradesh is exempted from the deduction of income tax (TDS) irrespective of its quantum. Is it true? Please confirm whether these societies are out of the purview of the Indian Income Tax Act, 1961. — RK Katoch

Section 194A of the Income-tax Act 1961 (The Act) provides that tax deduction provisions shall not be applicable to such income credited or paid in respect of:-

a) deposits with a primary agricultural credit society or a primary credit society or a cooperative land mortgage bank or cooperative land development bank.

b) deposits (other than time deposits made on or after July 1, 1995) with a cooperative society, other than cooperative society or bank referred to in (a) above, engaged in carrying on the business of banking.

You may, therefore, find out whether the cooperative societies in which fixed deposit etc; have been made are covered within the aforesaid exemption. In case such societies are not covered within the aforesaid exemption, deduction of tax will have to be made in respect of the interest income provided the same exceeds the limit prescribed under Section 194A of the Act.

I am a senior citizen aged 70 years and an Income-tax assessee. I retired from the Punjab Government in 2002 and have been filing income-tax return regularly. My total taxable income, including pension, interest on FDs and interest on savings account was Rs 4,34,092 for the financial year 2013-14 (AY 2014-15). On this amount, I deposited income-tax of Rs 6,661 with the bank as per my understanding. According to the Income-tax Department guidelines, no income-tax is chargeable in case amount of interest on savings account is less than Rs 10,000. As mentioned above, I had received interest on SB account of Rs 14,655 and deposited income tax on it. However, my friend says income tax may be computed after deducting Rs 10,000 from the total amount of interest on SB account. Please clarify as to whether I was to deduct Rs 10,000 from the total amount of interest on SB account before computing income tax or not.  — Gurmit Saroya

According to the provisions of Section 80TTA of the Act, a deduction to the extent of Rs 10,000 is allowable in respect of the interest earned in a savings account with (a) bank, (b) cooperative society carrying on the business of banking and (c) post office. You should have, therefore, claimed a deduction of Rs 10,000 in respect of interest earned in savings account which amounted to Rs 14,655. You can revise the return up to March 31, 2016 and claim such deduction.