Pension from LIC policy is taxable

SC Vasudeva

I purchased an LIC pension policy in 2000 and the premium is Rs 10,014 per annum. At that time, an additional rebate in income tax was allowed for that policy. This benefit was withdrawn later on and that section is merged with Section 80C. What will be the tax treatment for the amount of this policy as it will mature this year. — Ashok Sharma

A. It seems you had taken an annuity plan of LIC in 2000 for receiving pension from the fund referred to in clause (23AAB) of Section 10 of the Income Tax Act, 1961, in accordance with the provisions of Section 80CCC of the Act. The reply is, therefore, based on the said presumption. The amount of any pension received from such an annuity plan is taxable as income of the previous year in which such pension is received. 

We are now permanent residents of the US. We have savings account in India along with FDRs and are senior citizens. We wish to visit India next month. Do we have to change our savings account to NRO and NRE account or can we do it next year? 

We have immovable properties — one of which is 30 years old and others are 4-5 years old. How can we bring the proceeds from the sale of these properties to the US? If a will is executed and registered at Patiala, is it valid throughout the country? — Kanwal Parkash Seth

A. (a) Savings bank account and FDRs held by you should have been designated as Non-Resident (Ordinary) Account, the day you become NRI. It would thus be advisable to get your account so designated immediately on your arrival in India. The bank would be able to guide you for the alteration to NRO account and there should be no problem for such a change in the designation of the account.

(b) The amount realised on the sale of the property less than the tax payable on capital gain arising on sale of such property shall be deposited in your NRO account. You would be able to remit to the US a sum of $1 million in every financial year out of the net sale proceeds so deposited.

(c) A will executed at Patiala shall be valid for the entire country.

I sold my agricultural land (which I inherited after the death of my father) in 2012 and made FD (HUF) in SBI. After the maturity of FD, the amount was transferred in my savings account (HUF). I am the Karta of HUF account. I file return every year of this FD’s interest. My son is married and a Canadian citizen. Please advise on following queries:

• I want to transfer Rs 10 lakh to Canada in my son’s account.

• I want to transfer Rs 5 lakh in my wife’s saving account in India.

• I want to withdraw Rs 2 lakh cash from this savings account.

• Is there any kind of tax that I will have to pay in India or not?

— GS Sekhon

A. You have stated that you are filing  returns of the HUF declaring the amount of interest earned on the fixed deposit as HUF income. It seems the I-T Department has accepted your claim that the amount realised on the sale of the agricultural land inherited by you from your father is a HUF property. Replies are, therefore, based on the said presumption.

(a) You can remit a sum of $2,50,000 per financial year to your son as gift.

(b) Transfer of money to your wife’s account can be in the shape of a loan to her as the income of HUF can be used for keeping family’s expenditure.

(c) You can withdraw Rs 2 lakh from the savings account which can be used for meeting expenses of the family.