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I am a Union government employee and will retire on January 31, 2014. Am I eligible for senior citizen rates of income tax for the financial year 2013-14?
- Muthukumar
We have assumed that during the financial year 2013-14, you will qualify as a resident of India according to the provisions of the Income Tax Act, 1961 (the Act), and you will attain the age of 60 years. Accordingly, you will be eligible for senior citizen benefits in accordance with the provisions of the Act. The maximum exemption limit (where no tax is payable by the individual) applicable in the case of a senior citizen is Rs 2,50,000 for FY2013-14. Your employer should consider the said exemption limit while deducting tax at source on salary since he would have details of your date of birth in his records.
I am a salaried individual. I have gifted some money to my wife and she has opened a recurring deposit (RD) account in her name. She is a homemaker and has no source of income. What is the tax treatment for interest on the RD?
- Tarun Kumar Sahoo
According to the clubbing provisions of the Indian tax law, any transfer of an asset to spouse, without adequate consideration, attracts clubbing provisions and accordingly the income arising to the spouse out of the asset transferred is taxable in the hands of the transferor spouse. In view of the same, the interest income, arising from investment made by your wife in the recurring deposit out of the gifted money, shall be taxable in your hands according to the aforesaid clubbing provisions of the Act.
However, if your wife re-invests the interest income in any other income-bearing instrument and earns income from that, the second generation of income shall be taxable in her hands only and shall not be clubbed with your income.
In this regard, please also note that according to Indian tax laws, if the money is received from a relative (which includes spouse of an individual) without any consideration, then such money is not taxable in the hands of the recipient. Accordingly, the money gifted by you to your wife shall not be taxable in her hands.
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