Disability pension not taxable

SC VASUDEVA

Q. I am a disabled soldier of 1962 from the Indian Army and in receipt of disability pension. I was re-employed in the Defence Accounts Department and also in receipt of second civil pension for rendering service in that department. Disability pension consists of two elements viz service element and disability element and both elements are exempt from payment of income tax. I am not paying income tax on my disability pension. Kindly advise whether my second service pension which I am in receipt of for my service rendered in the Defence Accounts Department will be treated as service element of my disability pension and I will be exempt from payment of income-tax.

— KN Bakshi

A. The disability pension which contains service element as well as the disability element is exempt from tax in accordance with letter No. F.No.200/51/99-ITA-1 dated May 6, 2000 issued by Sh Samar Bhandra, Under Secretary to the Govt. of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi. However, the other pension in respect of your second service rendered in the Defence Accounts Department should not be exempt as the same cannot be mixed with the disability pension for which a specific exemption has been granted.

Q. I am a salaried employee and filing my return in the ITR-1 form. I purchased equity mutual funds worth Rs50,000 in FY 2015-16. I want to hold this investment for five years. My query is:

i) Can I file my return on ITR-1 (as I am not going to sell mutual funds for five years?

ii) Whether I have to show it in ITR-1? If yes, in which column?

— Renu Sharma

Your queries are replied hereunder:

i) You can file your return in ITR-1.

ii) There is no requirement to reflect your investment in equity mutual fund amounting to Rs50,000 in the income-tax return. A person who has a total income exceeding Rs50 lakh is required to give a statement of assets and liabilities in his income-tax return. I presume you are not having an income above Rs50 lakh.

Q. I am a retired Himachal Government employee. Apart from pension, I am also getting interest income from deposits. I have been paying my income tax regularly. I am also contributing towards my PPF account to the maximum permissible extent (currently Rs 1,50,000 per annum).

Kindly guide that apart from above contribution to PPF, is it possible for me to deposit some amount every year in the PPF accounts of my minor granddaughters without inviting any tax liability. The granddaughters’ PPF accounts are under the guardianship of their parents.

I understand that I can claim a rebate of Rs 1,50,000 only under Section 80C.

— Sushila Behl

A. You do not have to reflect the amount gifted to your son in the income-tax return. A note thereof should, however, be inscribed on the statement of your assessable income. Your son will have to disclose the amount of gift received from you in the column wherein exempted incomes are reflected. You can deposit the amount in the PPF account of your minor grandchildren. The same will be treated as the gift to your grandchildren and will not attract any tax liability in your hands as income earned from such deposit is exempt from tax.