Readers can send their queries regarding personal finance and investments to moneywise@thehindu.co.in. Our experts writing on personal finance will answer these questions. MoneyWise will not give specific recommendations for investment in any particular mutual fund scheme, shares or fixed deposits.
NS. I am a state government employee earning 60,000 per month and have not opted for any tax saving scheme (except NPS as mandated by the government; not interested in other tax-saving schemes either). My wife is also an employee of a state government PSU, earning Rs.80,000 a month.
He has also not opted for tax saving schemes. We are interested in buying an independent house (within ₹80 lakhs). But the problem is with taking a home loan; My wife will not get HRA which will be ₹20,000 per month as we are living in a rented house.
Is it better to take a home loan against my salary? And, save some money on my wife’s income and repay some amount annually, or is it better to take home loan jointly? My wife can save tax by taking home loan but she will suffer more due to non-availability of HRA. Also, we are not really interested in insurance or mutual fund schemes. kindly advise.
a. By applying for a home loan as a joint owner-cum-applicant, you can each claim a deduction of up to ₹3.5 lakh from your total income. Up to ₹1.5 lakh as principal repayment and up to ₹2 lakh by way of interest repayment. HRA exemption cannot be claimed by your wife.
NS. I have a senior citizen savings scheme deposited with the post office. The annual interest on the deposit is less than ₹50,000. Hence there is no need to submit Form 15H. But the post office staff insist on submitting the form; Otherwise, the system will deduct the tax, he says. Please advise on the matter.
a. TDS need not be deducted by banks, co-operative societies and post office if the interest payable to such senior citizens in an assessment year is less than ₹ 50,000. Irrespective of whether Form 15H is submitted or not, TDS deduction is not applicable. You can complain regarding this issue to the concerned authority in the post office.
NS. I worked in Saudi Arabia for 8 years and came back after resigning from the company in November 2021. I was in Saudi Arabia for 227 consecutive days in the financial year 2020-2021. I have NRE and NRO accounts in a bank for transactions. I hope to find another job in the Gulf if the situation becomes favorable. I have some NRE Fixed Deposits.
My query is: When will the NRE status be available for me in 2021-22? For how long can I keep NRE account and deposit as NRE deposit?
I wrote to my tax advisors who advised me to approach the bank. The bank did not give any proper reply.
[Should I have withdrawn] All amount in NRE Fixed Deposit before this March ends? If I withdraw money in 2021-22, will it be taxed? If the NRE situation persists in 2021-22, I think there should be no problem. I request you to suggest what can be done.
Narve Nagendrabhat Jagdish
a. For FY2020-21, you will be treated as a non-resident. As long as you are a non-resident (NR) or resident but not ordinarily resident (RNOR), interest from NRE accounts/FDs will be non-taxable in India. For the financial year 2020-21, interest from NRE account/FD in India will be non-taxable. Also, interest from NRE account/FD will be non-taxable in India if you are resident for 3 financial years in consecutive financial years.
NS. I am 53 years old CISF employee. Whether contribution up to ₹5 lakh per year to GPF (General Provident Fund) by paramilitary personnel like CISF and CRPF is exempt from tax deduction? Please also suggest better alternative investment or savings options which are inflation proof and tax-efficient.
a. Deduction of General Provident Fund contribution is allowed under section 80C of the Income Tax Act, 1961. The limit of deduction is ₹1.5 lakh per annum subject to the limits prescribed in section 80CCE. GPF deduction can be claimed by all government employees for whom GPF is being deducted by the government body/authority.
A resident individual has the following popular options to invest ₹1,50,000 per annum to save tax under section 80C and an additional ₹50,000 under section 80CCD(1B) –
1. Life Insurance for Self and Dependents
2. Equity Linked Savings Scheme (ELSS)
3. Tax Saving Fixed Deposit
4. National Pension Scheme (80CCD(1B))
5. Unit Linked Insurance Plan (ULIP)
6. Sukanya Samriddhi Yojana
7. National Savings Certificate
It is to be noted that each of the above investment options has various riders and restrictions in terms of applicability, minimum investment, lock-in period, treatment to maturity, treatment of accruals, etc., and caution should be taken while considering investments in any investment. should go from from them.
(N. Shree Kanth is a Partner, GSS Associates, Chartered Accountants, Chennai)
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