Tax payable by a recent retiree
I retired on attaining 60 years at end of May 2017 from a Govt of India autonomous institution. I got terminal benefits, namely
(a) gratuity and (b) leave encashment from my office, and
(c) PF amount under CPF scheme from EPFO.
(d) I got regular salary for the months of March, April & May during 2017.
I put part of the above amounts in
(i) LIC Jeevan Akshay,
(ii) Pradhan Manthri Vaya Vandana scheme,
(iii) Post Office Senior Citizen's Monthly Income Scheme,
(iv) Govt of India Senior Citizen's Savings Scheme.
From the above, i get an interest of about Rs. 50,000 per month (from June/July onwards).
I do not get any pension, but i do get a small amount every month as Family Pension from PF Office.
Please let me know which of the above amounts are taxable during the Financial Year 2017-18.
Asked 6 months ago in Income Tax from Kakinada, Andhra Pradesh
Gratuity, leave encashment and PF are exempt from the tax.
Taxable income would be=Salary +Interest income+Family pension.
For leave encashment at the time of retirement, an employee is entitled to exemptions under Section 10(10AA). For government employees, leave encashment at the time of retirement is exempted from taxes entirely. Similarly gratuity and PF is taxfree.
For the year 2017-18, the following amounts will be taxable:
1. Salary received in Apr and May 2017
2. Interest earned from June onwards and
3 Monthly family Pension that you get.
Hope I have been able to solve your query.
Thank you very much, Sir.
Now, (1) as Proposer i paid Rs. 2 lakhs this year towards Life Insurance for my son (insurer), and
(2) i also contributed about Rs. 2 lakhs towards National Pension Scheme of my wife (House Maker).
Are these amounts deductible from my taxable income ?
Asked 6 months ago
Yes you can claim the insurance premium paid u/s 80C. However the maximum limit is only 1.5 lakhs.
There is a deduction of Rs 50000 u/s 80 CCD for contributions towards Nps scheme. However, since thd NPS is in your spouse's name you will not be able to claim this benefit even though you may be paying the sum.
1) You can claim deduction of max. of Rs.1.50 lacs for the payment towards LIC of your son.
2) No deduction allowed for payment of NPS wife.
Thank you very much for the information, Sir,
Asked 6 months ago
No problem at all.
As per the details provided by you, all the amounts withdrawn by you as post retirement benefits are exempt from tax.
However, any interest income earned from the above shall be fully taxable in your hands.
Additionally, LIC contribution and NPS contribution are allowed as deduction under Chapter VI.
Out of the above incomes, only the following would be taxable:
1. Family pension
2. Interest earned
Others would be exempt.
Yes, deductions for LIC shall be available subject to the maximum of Rs. 150000.
I hope your first question is adequately answered and hence I am moving on to the your follow up question.
Out of the above two investments, LIC premium payment for your child eligible for deduction u/s 80C (if the policy is eligible). Maximum allowable deduction is 1.5 lacs.
Assume that the query is resolved. Feel free to get back in case any part of it is left unattended.
M.Com., CA, LL.B
CA, Greater Mumbai
I assume that the query has already been resolved by other experts. Feel free to get back in case any part of it has been left unanswered.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP