Fire your tax related queries and i would get it solved!!!

[krb2709]

Dear Sir,

My question is that am i correct in my following understanding
"I earn out of salary. Out of this tax paid income of mine if I give any amount for as many times I wish during the year to my major sons then this will not attract any gift OR income tax on me as well as gift OR income tax in the hand of my major children. Also If these major sons invest such amount received from me & earn out of the same , their this earning will not be clubbed with my income."

 

[krb2709]

I was married in 1984. My wife had received Rs. 30,000 gift from her father during 1994. This amount was invested in equity only by IPOs & never in FD. Since then she has built up portfolio from this amount. From 1994 up to till date, she has never earned by way of bank interest, divided or capital gain in excess of minimum exempted limit of income tax. In short her income out of all sources in any of the year till now was never in the taxable bracket during respective year. She never sold any share except in 2006-07 ( of app 5 lacs), but during this period long term capital gain is not taxable. She was never falling in 1 in 6 criteria to file mandatory return also. She has not filed return till now. Now my question is that , is it necessary for her to file return? and when she try to file the same now will any penalty be charged? Even if she do not file return, will her portfolio (28 lacs now) will be considered legal money & she can gift the amount to her major children when ever she wants by selling the shares.

 

[krb2709]

I have PPF account which will be completing 15+5+5 years now. My question is that can it be further extended for as many 5 years blocks i wish? As ppf act says you can extend account for 5 years but do not specifies that for how many such 5 years blocks extension can be availed?

 

[diosys]

But sir this article mentions this strategy

http://www.dnaindia.com/money/column_income-on-rs-78-lakh-can-be-tax-free_1207691

Note::

Does it mean he had 78 lakh of amount in account which on passing as gift the income earned on it becomes tax free which is what your statement means...?

There is a difference magnet....

In the article the money was gifted before the income was earned on it....The basic money for creating the FD was trfd before the interest accrued on it....

in your quoted eg it is not so and you have already earned the income on it....

 

[diosys]

hi, I have a doubt about short term capital gains.

If Interest Income + STCG - 80C is less than the taxable limit will the STCG be liable to tax at the flat rate of 10% or will I get the benefit of Section 111A? (hope I have got the section right)?

Note: STCG is from sale of shares for which STT has been paid.

Your understanding is correct you will get the benefit till you are below the basic exemption limit

 

[diosys]

Dear Sir,

My question is that am i correct in my following understanding
"I earn out of salary. Out of this tax paid income of mine if I give any amount for as many times I wish during the year to my major sons then this will not attract any gift OR income tax on me as well as gift OR income tax in the hand of my major children. Also If these major sons invest such amount received from me & earn out of the same , their this earning will not be clubbed with my income."

correct........

 

[diosys]

I was married in 1984. My wife had received Rs. 30,000 gift from her father during 1994. This amount was invested in equity only by IPOs & never in FD. Since then she has built up portfolio from this amount. From 1994 up to till date, she has never earned by way of bank interest, divided or capital gain in excess of minimum exempted limit of income tax. In short her income out of all sources in any of the year till now was never in the taxable bracket during respective year. She never sold any share except in 2006-07 ( of app 5 lacs), but during this period long term capital gain is not taxable. She was never falling in 1 in 6 criteria to file mandatory return also. She has not filed return till now. Now my question is that , is it necessary for her to file return? and when she try to file the same now will any penalty be charged? Even if she do not file return, will her portfolio (28 lacs now) will be considered legal money & she can gift the amount to her major children when ever she wants by selling the shares.

1.) It is not necessary for anyone to file their income returns till they are below the basic exemption limit....Wealth is not the criteria it is the Income which needs to be seen. Keeping the shares is wealth and selling them for profit is income....

THOUGH I WOULD SUGGEST THAT TO FILE HER RETURN OF INCOME FOR UTMOST PEACE OF MIND.

2.) Even if she does not file her return her money cannot be said to be tainted.

 

[diosys]

I have PPF account which will be completing 15+5+5 years now. My question is that can it be further extended for as many 5 years blocks i wish? As ppf act says you can extend account for 5 years but do not specifies that for how many such 5 years blocks extension can be availed?

i am not aware of it.

 

[magnet]

There is a difference magnet....

In the article the money was gifted before the income was earned on it....The basic money for creating the FD was trfd before the interest accrued on it....

in your quoted eg it is not so and you have already earned the income on it....

Hmmm so according the the article e.g the person had 78 lakh in his account..If he had kept it in FD At 10% his return would had been 6.6% and in order to get 10% the person transferred the amount as gift....In short the 78 lakh is the amount already taxed and held by the person and inorder to get better return he gifted it

Am i correct now ,Sir?

 

[greatindianwiseman]

Your understanding is correct you will get the benefit till you are below the basic exemption limit

Thanks a lot.
I forgot to ask about 80U benefit of Rs 50k for which i am eligible. Is it available for STCG? Section 111A is really confusing for me

So now, will I have to pay tax if Interest Income + STCG - 80C - 80U < Rs 160,000?