Security deposit not taxable

SC Vasudeva

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I am likely to get Rs 5 lakh as a security deposit for renting out a shop on a long-time basis. This deposit will be refunded to the tenant when he vacates the shop. I intend to put this amount in a bank as an FD. I understand that monthly rent from shop and interest earned from the FD would be taxable. My query is whether this security deposit amount (Rs 5 lakh) is taxable or not. I am a senior citizen aged 66 years. —Capt Balraj Singh Bajaj

The amount of security deposit received by you from the tenant is not taxable as the same is refundable to the tenant as and when he vacates the shop. There is no provision in the Act for bringing this amount to tax as the amount of security deposit so received is not in the nature of income.

I am an employee of Punjab State Power Corporation Limited. My query is regarding deductions u/s 80CCD. The query pertains to FY 2015-16 and AY 2016-17. My tentative income and savings detail for the 

AY 2016-17 is as follows:

• Gross income: Rs 11,00,000 (including employer share towards NPS)

•  Savings:

a)  PPF: Rs 1,50,000

b)  NPS (own share): Rs 82,400 

(within 10% limit of total salary)

c) NPS (employer share): Rs 82,400 

(within 10% limit of total salary)

I want to claim deductions as per the following details:

• u/s 80C:  Rs 1,50,000
• u/s 80CCD (1B): Rs 50,000 (from the amount invested in NPS, own share)
• u/s 80CCD (2): Rs 82,400
• Total deduction: Rs 2,82,400

So the taxable income remains = Rs 8,17,600

Are my calculations correct? Am I correct in claiming the deductions as per the details given by me? Please clarif — karamvir singh

Deduction in respect of contribution to pension scheme of the Central Government is limited to Rs 50,000 under Section 80CCD (1B) of the Income-tax Act, 1961 (The Act). However, deduction under Section 80CCD(2) of the Act is allowable, if a person has paid or deposited under a pension scheme notified or as may be notified by the Central Government not exceeding 10% of the salary as provided under Section 80CCD(1) of the Act. You intend to deposit Rs 50,000 under Section 80CCD (IB) of the Act. Section 80CCD (2) of the Act has to be read with sub-section 80CCD (1) of the Act.  Therefore, in case you make or deposit under Section 80CCD (IB) of the Act, the provisions of Section 80CCD (2) of the Act would not be applicable and no deduction would be permissible under Section 80CCD (2) of the Act.  Accordingly, you will be entitled to the following deductions from your salary:

Under Section 80C: Rs 1,50,000

Under Section 80CCD (1B) Rs 50,000

No deduction would be admissible under Section 80CCD (2) of the Act in view of the fact that no amount has been deposited by you under Section 80CCD (1) of the Act.

My mother works with the Haryana Government as an officer. In 2010, my father expired. He was also working with the Haryana Government. Till the date of his retirement, my mother will receive his salary. But now she is under double burden of her own salary and along with my father salary which bring her to the slab of 30% in tax. Earlier, my  father and mother were taking benefits separately of Rs 2 lakh that was tax-free, Rs 1 lakh savings and on the remaining amount they used to pay tax but from 2010 after his death, my mother is receiving his salary and she came under 30% tax slab. Please let me know how my mother can save more tax after the addition of my father's salary in her income. —Anurag

Your mother can start contributing to pension scheme of the Central Government. She can contribute to the extent of Rs 50,000 under Section 80CCD (1B) of the Act. She can thus avail this deduction in respect of her salary income in addition to Rs 1,50,000 allowable under 

Section 80C of the Act.