Invest Rs 50,000 in NPS for extra tax deduction
SC Vasudeva
I have advised my son, 32, to contribute Rs 50,000 every year till he gets 60 towards National Pension Scheme (NPS) and claim a full deduction under Section 80CCD(IB) besides a deduction of Rs 1,50,000 under Section 80C for his contribution to PPF from salary income. Am I right in giving such suggestion? What will be the expected amount of corpus available to him after 28 years? — Lalit Bharadwaj
Your son would be entitled to a deduction of additional amount of Rs 50,000 in case such amount is contributed towards National Pension Scheme apart from the amount of Rs 1,50,000 allowable as deduction under Section 80C of the Income Tax Act 1961. It is not possible for me to give the expected amount of corpus which would be available to him after 28 years as the interest earned on such deposit would vary every year.
I was having NRI status till March 2016 as I had been working abroad for over 15 years. From March 2016, I am in India. I have FDs in an NRE account. Do I have to pay income tax on interest earned on NRE FDs? If yes, how will I calculate it? If a friend repaid me the loan (given to him 2 years ago) this year, do I need to declare it in tax return? — Vikas Guleria
- You would be liable to pay tax on the interest income for the year in which you became a resident in India provided the amount of interest earned is higher than the maximum amount which is not chargeable to tax. The amount of interest earned on NRE deposit will not be taxable till such time you are a non-resident. Tax would be computed on the basis of the slab rate applicable to an individual.
- The loan must have been given out of your NRO account as any rupee payment has to be from such an account. The repayment of loan will be reflected in your bank statement in your NRO account or the rupee account opened after you became resident. This may have to be linked with the loan given from your NRO account. There is no column in the income-tax return in which the transaction of the nature given in your query is required to be disclosed. However the payment and receipt thereafter having been reflected in the bank statements, the transaction of loan can be linked and explained in case there is any query by the tax department on this issue.
