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I am a pensioner retired from a bank. I had been filing ITR 1. After retirement, I started a freelance consulting, and filed ITR 3 for AY2018-19 showing pension income and business income.
During the current fiscal, am I eligible to claim the standard deduction of ₹40,000 from my pension income and deduction of ₹50,000 for interest on FDs u/s 80TTB allowed for senior citizens because my business income/loss also forms part of my taxable total income?
Since the business is not generating income, can I opt to file ITR 1 for the coming years and opt out of filing ITR 3? Are there any restrictions for such changeovers for return filing?
Asok Kumar PR
Yes, you can claim standard deduction of up to ₹40,000 from your pension income for AY2019-20, as the same is considered as income under the head salaries.
Further, being a senior citizen, you are eligible to claim deduction of up to ₹50,000 for interest earned from fixed deposits under Section 80TTB.
With respect to tax return forms, this has to be determined at the time of filing the tax returns based on the nature of your income, quantum of income, residential status, etc, in the relevant financial year.
If your business is already closed in AY2018-19, you may opt for filing of ITR 1/2, as applicable for AY2019-20.
You will have to file ITR 3 if you have to carry forward any business losses.
I started investing in the PPF in 1992 in my son’s name (then a minor). If encashed now, I presume the total accrual would go to him.
Is it taxable in his hands?
He is in the 30 per cent tax bracket.
Is it taxable in my hands if he gifts it to me (30 per cent bracket) or to my wife
who is a non-assessee?
BV Rao
Maturity proceeds from a Public Provident Fund account is exempted from taxation.
Hence, there will not be any tax liability upon maturity.
Regarding your query on gifts, the Income Tax Act does not provide for taxation for gifts from relatives.
As parents are covered under the definition of a relative, any amount received from your son as ‘gift’ will not be taxable in your/your spouse’s hands.
However, income earned from such gift will be taxable.
For instance, if you invest the gifted money in fixed deposits, the interest from such deposits will be taxable in your hands.
The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in
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