Tax queries: Annuity received on a periodic basis is taxable as an income under the head ‘Salaries’ – Economic Times
Dilip Lakhani Senior Chartered Accountant, answers queries from our readers on income tax and other levies.
I was a PSU employee. The terms of employment included contributions of 15% to employee superannuation fund trust set up by the company and recognised under the I-T Act. On retirement, I received one-third of the accumulated money from the trust. The balance was paid by the trust to LIC for purchase of annuity plan for life. Will the annuity received by me be taxed as income from salary or income from other sources? If it is considered income from salary, can I claim standard deduction of Rs 40,000?
As per Section 13 of the I-T Act 1961, any payment from an approved superannuation fund will be exempt provided that the payment is made to an employee in lieu of or in commutation of an annuity on his retirement. You will not be liable to pay tax on receipt of one-third of the accumulated balance received. Annuity which you will receive on a periodic basis in future will be taxable as an income under the head ‘Salaries’. You will be eligible to claim standard deduction of Rs 40,000 from the said taxable ‘Salary’.
I am planning to buy an apartment in joint ownership with my wife. We would take a joint home loan for this. Can both of us claim tax benefits on interest and principal? Can tax benefits be claimed if the property is in a single name while loan is taken jointly?
Deduction for interest and principal repayment on joint home loan for joint home shall be eligible to each coapplicant in the same proportion in which the asset is owned by each co-applicant. I understand that your wife also has independent source of income/ source of her owned funds which will be invested in acquiring joint ownership rights/ repayment of loan. You and your wife should both be co-owners of the apartment. In these circumstances, you and your wife will be eligible to take the tax benefit.
Please send your queries on Stocks to firstname.lastname@example.org; Mutual Funds to email@example.com Tax to firstname.lastname@example.org Insurance to email@example.com Realty to firstname.lastname@example.org