Your taxes

My mother turned 80 this September. Her expected income this year will be around ₹4 lakh. Can she still avail of the tax exemptions for very senior citizens for the full year 2014-15? Also, can she submit 15H forms for tax exemption on interest from her FDs?

Mohan

A very senior citizen as per tax laws means an individual resident in India who is of the age of 80 years or more at any time during the relevant previous year. For financial year 2014-15, the maximum amount not chargeable to tax in case of a very senior citizen is ₹5 lakh.

No deduction of tax shall be made in the case of a resident individual if such individual furnishes to the person responsible for paying income of the specified nature a declaration in the prescribed form (form 15H) to the effect that the tax on his estimated total income of the previous year will be nil. This declaration can be made only by an individual who is of the age of 60 years or more at any time during the previous year.

In your mother’s case, since she turned 80 in September 2014, she can avail the higher slab benefit for the financial year 2014-15. Also, considering that the total income of your mother including interest from her FD is below the basic exemption limit, she can submit form 15H to the bank for not deducting tax on her interest income.

I am a house wife (resident Indian) and have made a short-term capital gain of ₹40,000 on selling shares. The investment was made from saving a portion of the money given to me by my husband for household expenses. Should I pay tax on these gains? I have no other income.

RT Ashwini

According to the Income Tax Act, in case of transfer of an asset to a spouse without adequate consideration, clubbing provisions are attracted. However, based on some judicial precedents, if an assessee gives money to his wife for fulfilling household needs and the wife purchases any asset out of the money saved, the income derived from such an asset does not attract clubbing provisions.

Further, in the case of a resident assessee, where the total income as reduced by short-term capital gains is below the maximum amount which is not chargeable to tax (i.e. ₹2,50,000 for FY2014-15), then such short-term capital gain shall be reduced by the amount by which the total income so reduced falls short of the maximum amount which is not chargeable to income tax. The tax on the balance capital gain shall be computed at the rate of 15 per cent (excluding surcharge and education cess). The above provisions are applicable in case of short-term capital gains arising from the transfer of an equity share where such transaction is chargeable to securities transaction tax (STT). To conclude, since your only source of income, i.e. short-term capital gains from sale of equity shares (STT paid), is lower than the maximum amount not chargeable to tax, you are not required to pay any income tax for FY2014-15.

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