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T. Banusekar

MY PPF account was set up in the year 1982 and 20 years have been completed now. Can I extend this account for a further five years? If not can I open a fresh PPF account? Will the amount drawn from the PPF account on maturity be taxable?

Sanjay Saxena

Reply

A PPF account can be extended beyond 15 years for further block(s) of five years. Thus, a 15-year account can be extended up to 20 years, 25 years and so on. The reader can, therefore, extend the account for a further period of five years. The reader may, if he closes this account, open a fresh PPF account. Any amount received from a PPF account will be exempt in the hands of the account holder under Section 10(11) of the Act.

Query

Can an assessee claim interest on refunds from the Income-Tax Department? If so, will this interest also be available to salaried employees?

Anonymous

Reply

Interest on refund can be claimed by an assessee under Section 244A of the Act. Simple interest is payable by the Government at 2/3 per cent for every month or part thereof (3/4 per cent from June 1, 2001 to May 31, 2002 and 1 per cent from October 1, 1991 to May 31, 2001). This interest is payable starting from the date of payment of tax in case of a refund arising out of self assessment tax, or from the first day of the assessment year in case of a refund arising out of advance tax or tax deduction at source. Interest is computed up to the date of granting of refund. No interest is payable if the amount of refund is less than 10 per cent of the tax determined. Interest can be claimed by all assessees and has nothing to do with the nature of income offered by the assessee. Interest can be claimed even on refund arising in case of salaried employees subject only to the condition that refund is more than 10 per cent of the tax determined.

Query

I had invested in units of the LIC Mutual Fund in 1992 and claimed a deduction under Section 80CCB during that year. These units have now been redeemed and there is a loss on such redemption.

Can this loss be adjusted against my salary income? Tax has been deducted at source while payment was made on redemption. Can this be adjusted against my tax on salary income, or against income from house property?

Anonymous

Reply

A capital loss can only be set off against a capital gain of the current year, or be carried forward and set off against capital gains of succeeding years. This has been explained elaborately to a query posed by Mr T.K. Das.

Since tax will be fully deducted at source on the salary income by the employer, it will not be possible for the tax deducted on redemption of units to be adjusted against such income.

However, the same can be taken credit for and adjusted against the tax payable on other incomes, including house property income. At this stage it may be noted that the law does seek to establish a one to one correlation between the income and the tax deducted thereon.

Query

Under the rules of my organisataion, leave can be encashed when an application is made for the same, and is duly authorised by the competent authority. Is it possible to plan the tax affairs by encashing the leave by presenting an application only in the financial year following the year I retire?

R. Srinivasan

Reply

In case of non-government employees, an exemption is available in respect of earned leave encashed at the time of retirement to the extent of the least of the following:

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