Your Taxes

This question pertains to AY2014-15. I would like to know whether the employer's contribution (Government contribution) toward my NPS account has to be added to my total income before claiming deduction under Section 80CCD(2). Kindly clarify.

Anurag Agarwal

As per the provisions of the Income Tax Act, 1961 (the Act), in the case of an individual employed by the Central Government or any other employer on or after January 1, 2004, where the employer makes any contribution to employee’s account under a notified pension scheme, the employee shall be allowed the deduction of the entire amount contributed by the employer when computing total income − up to a maximum of 10 per cent of his salary in the financial year − under Section 80CCD of the Act. Any contribution made by the employer to the account of an employee in the financial year under the notified pension scheme is included in the salary of the employee as per Section 17 of the Act.

I am assessed at the 30 per cent tax slab. My minor daughter's income of a little less than ₹70,000 is clubbed with my income. Her income is by way of interest from bank deposits. Can I give my PAN number and Form 15G for non-deduction of TDS to the banks where her FDs are held?

Lalit Somani

As per the provisions of Section 64 of the Income Tax Act, 1961 (the Act), any income that arises or accrues to a minor child of the assessee is included while computing the total income of the assessee. The said provisions are not applicable if the minor child is suffering from any specified disability. The income of the minor child shall be included in the income of that parent whose total income (excluding minor child’s income) is greater, where the marriage of the parents subsists, or in the income of that parent who maintains the minor child where the marriage of the parents does not subsist. The assessee is entitled to claim exemption of ₹1,500 in respect of each child whose income is included in his total income.

In your case, your minor daughter’s interest income shall be included in your total income, assuming that your income is greater amongst you and your spouse. Since the income shall be clubbed in your hands, it is advisable not to submit Form 15G to the bank. You can, however, file a declaration with the bank mentioning your PAN and other relevant details to claim the credit of tax deducted at source on the interest income of your minor daughter.

The writer is a practising chartered accountant. Send your queries to >taxtalk@thehindu.co.in

COMMENT NOW