Relief under Section 89(1) of the Income Tax Act, 1961 is allowed under the new tax regime as well.
Q. I am 85 and a retired engineer. I do not draw any pension. Based on the advice given in your article titled ’Where there is a will,’ I have prepared a hand-written, plain-paper will. The following are my doubts:
1) Do I need to get it signed by one or more witnesses?
2) If so, can my wife be a witness?
Gaurav Mashruwala replies: Two witnesses are required for any kind of will. There is no restriction on who can be the witness but as a good practice, refrain from having any beneficiary as a witness. Registering a will is optional. But a registered will always have more weightage.
(Gaurav Mashruwala is a financial planner and author of Yogic Wealth)
Q. I am a pensioner. I couldn’t attach my insurance document during 2020-2021 for claiming deduction under 80D.
1) Can I attach the same during 2021-2022 so as to claim deduction under section 80D?
2) I have a fixed deposit for ₹15 lakh under the senior citizens savings scheme for 5 years. Can I deduct ₹1.5 lakh from income under 80C for the whole tenure of 5 years?
N. Sree Kanth replies: Deduction under Section 80D of the Income Tax Act, 1961 can be claimed only in the assessment year during which the premium towards the health insurance is paid. You cannot claim in FY22 for the health insurance paid in FY21. Deduction towards senior citizens savings scheme is restricted to the limits provided under Section 80CCE. The limit is ₹1.5 lakh. You cannot claim the deduction towards any investment made in a particular previous year in excess of the limits prescribed during the tenure of the investment in the forthcoming assessment years.
Q. I opted for the old tax regime for the purpose of TDS in salary. Is there any possibility to switch to the new tax regime at the time of filing returns? I have also received arrears of salary for three years from 2017 to 2020 but I failed to file ITR for two years; I have filed only for 2019 to 2020. I am seeking relaxation under Section 89(1) Form 10E. Are I-T returns for all the 3 years mandatory to claim sec 89(1)? I have Form16s for the above two years. Is relief under sec 89(1) possible under the new tax regime?
A. 1) CBDT has clarified that intimation to employer with respect to opting of new / old regime is for the purpose of deduction of TDS only. At the end of the year, you may choose to opt for tax rates under the new or old regime whichever is advantageous to you. You may file your ITR accordingly and claim refund of the excess deduction.
2) You are to file Form 10E in order to claim relief under Section 89(1) of the Income Tax Act, 1961 prior to filing the ITR of the AY in which the relief is being claimed. There is no provision that the ITRs of the assessment years pertaining to the arrears salary ought to have been filed in order to claim relief in this AY.
3) Relief under Section 89(1) of the Income Tax Act, 1961 is allowed under the new tax regime as well.
Q. My mother is 87. She has two sons and a daughter. My brother is a U.S. citizen. My mother has property in Hyderabad and Bengaluru in her name. Can she transfer the property in my brother’s name and if so, what will the tax implication be?
A. Your mother may settle the properties in the name of her children by entering into a settlement deed and by paying the requisite stamp duty. The method of transfer will be the same for both resident and non-resident children. There is no income tax implication at this stage. Income tax is attracted only when the children further transfer the property to persons who are not relatives as defined in the Income Tax Act, 1961.
Q. I am a PSU employee with two houses in my name and I do delivery trades in shares with STCG and LTCG. Kindly suggest a suitable ITR form for me.
A. ITR 2 is to be filed by you as you have salary income, two house properties and capital gains.
Q. I am a senior citizen. I purchased a money-back insurance policy favouring my daughter. As per terms of the policy, I am the policyholder and my daughter is the insured person. The insurance premium is paid by me from my source. I request you to clarify:
1) Can my daughter claim relief under Sec.80c even though the premium is paid by me and I am not claiming the relief?
2) Being a money-back policy, the interim amount due, as per terms of policy, was credited to my account. Is the payout taxable in my hands? If yes, can I shift the tax liability to my daughter by transferring the payout to her though the premium is being paid by me?
A. 1) Section 80C deduction benefits can be claimed only by the assessee who invests / pays / incurs the eligible investments / expenses and such investments / expenses are to be in accordance with the conditions laid out in the provision in order to claim the deduction. The benefit cannot be transferred to any other assessee from one assessee.
(N. Sree Kanth is partner, GSS Associates, Chartered Accountants, Chennai)
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