Rs 15,000 or 1/3rd of family pension exempt from tax

SC Vasudeva

Q. I seek your guidance in respect of pension to divorced daughter. My query is if both parents of a divorced daughter were retired from government service and were getting pensions from their respective departments. They are now no more. Under these circumstances, please advise whether the daughter is eligible for pension of both the parents.  — Mohinder Sharma

A. It is presumed that the daughter of the deceased parents is the only legal heir and, therefore, she is entitled to receive the family pension from both the departments. She would be entitled to a deduction of 1/3rd of the amount of the family pension or Rs 15,000, whichever of the two is less from the aggregate of the family pension so received. Balance amount will be taxable in her hands.

Q. My total income in the financial year 2016-17 was Rs 6,95,000. Out of this, salary was Rs 6,50,000 and bank FD interest was Rs 45,000. I received arrears of Rs 26,000 for the previous financial year. I also made an investment of Rs 1,50,000 under Section 80C. If I calculate the receipts for this financial year, it comes out to be Rs 4,93,000 (Rs 5,19,000 minus Rs 26,000). Please clarify whether I am eligible for rebate of Rs 5,000 under Section 87A of the Act. —  Mohinder Sharma

A. On the basis of figures given in the query, your total income, including arrears for the preceding year, would be more than Rs 5 lakh even after deducting the investment of Rs 1,50,000 made by you. Therefore, you would not be entitled to the rebate under Section 87A of the Act for the assessment year 2017-18.

Q. I retired from a nationalised bank in 2009. I am getting my pension and also family pension of my wife. As per Budget 2018-19, a standard deduction of Rs 40,000 is available to pensioners also. I used to claim Rs 15,000 or 1/3rd of my family pension, whichever is lower, as standard deduction under Section 57 (iia). Since there is a standard deduction of Rs 40,000 which I can claim from my pension from this year, kindly clarify whether I can also claim Rs 15,000 or 1/3rd of my family pension, whichever is less, from my family pension. — Chidananda Shenoy

A. You can continue to claim deduction for Rs 15,000 or 1/3rd of the family pension, whichever is lower, from such family pension.

Q. I need your guidance in respect of better choice between nomination and either or survival option in the deposits made with the banks if both persons are senior citizens and are keeping good amount in banks. As in case of nomination, if the deposits are in single name, after the death of the account holder, the proceeds are transferred into the nominee’s name. Also, if the deposits are in either or survivor’s name, even then the deposits are to be converted into the survivor’s name. So my query is which option is better? Also please inform in case of nomination when the deposits are transferred into nominee’s name, is there any charge in any form to be paid by the receiver of the deposits in whose name the deposits are transferred? Please advise. — Mohinder Sharma

A. A nomination in the records of the bank should always be made whether the deposits are in single name or joint name (husband and wife, father and son). Nomination does not confer ownership of the amount received by a nominee. It is a process whereby the funds held by bank or any other such like institution in the account of the deceased can be paid to such nominee after the death of the account holder without any hassle. A nominee is always accountable to legal heir(s) with regard to the amount which has been received by him after the death of the account holder. I hope this clarifies the doubt raised by you with regard to the nomination.