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Q. I want to invest about 5 lakhs in government bonds such as NSC or NHAI. If I invest in the name of my wife, would she need to pay any taxes initially. This 5 lakhs is from my savings and I am an income tax payee, however, my wife is a housewife and does not have any income.

S. Sundar Kumar

A. Gift from husband to wife is not chargeable to tax. However, under the clubbing provisions of the Income Tax Act, 1961, income arising from direct or indirect transfer of assets to an assessee’s spouse without adequate consideration will be assessed in the hands of the transferring spouse. The interest arising from the government bonds invested by you in your spouse’s name will be taxable in your hands and not in your wife’s.

Q. Kindly enlighten me whether it is mandatory to file income tax return even if my total income in a financial year is less than exemption limit but there is TDS of ₹46 from dividend from mutual fund and a capital gain of ₹7,000 in 2020-2021. Kindly offer your guidance.

R Deenathayalan

A.Under Section 139(1) of the Income Tax Act, an individual has to file ITR if the total income exceeds the maximum amount not chargeable to tax and the assessee satisfies any of the following conditions, holds or is a beneficial owner/beneficiary of an asset located outside India or has signing authority in any account held outside India, deposits more than one crore rupees in one or more current accounts, has incurred more than two lakh rupees for foreign travel for himself or others and has incurred more than one lakh rupees towards electricity. Kindly check if any of these conditions apply to you. If not, as stated by you your total income is less than the exemption limit, you are not required to file the ITR for the relevant assessment year. Further, ITR can be filed if you want to claim refund of the TDS deducted from the dividend earned from mutual fund.

Q. I would like to understand how tax savings can be achieved and also the ITR forms to be used for personnel hired as consultants/contract employee. Currently, I am working as a consultant and I do not have the tax benefits of a salaried employee like HRA, conveyance, PF, etc., instead a fixed amount is paid. Could you please guide me on this. I understand that if the yearly income is greater than 20 lakhs, only then GST needs to be furnished and I am below the limit. Request your guidance on this.

Veena H

A. Income received by consultants/contract employees are taxable under the head “Profits and Gains from Business or Profession”. Under this head, the income received for rendering services to your clients minus the expenses incurred by you for rendering such services will be the taxable income. You are to also maintain the books of accounts for such profession run by you. You may opt for presumptive basis of computing the profits/gains as per Section 44ADA and your income is deemed to be 50% or the net income (income less expenses) whichever is higher. Further, you can avail the benefit of this section only up to ₹50 lakh gross income per assessment year. Your income must fall under the specified professions as provided under Section 44AA such as legal, medical, engineering, architectural profession or the profession of accountancy or technical consultancy or interior decoration or professions as notified. The relevant ITR which is to be filed by you is ITR-4.

Q. Myself and my wife bought a house together. She is a housewife and just a co-borrower. For tax purposes to claim HRA, can I pay rent to her and claim the rental amount under HRA. I don’t want to claim anything under my house loan. Please suggest.

Srikanth

A. As you are a joint owner of the house property, you cannot enter into a rental agreement with your wife and pay rent to your wife in order to claim HRA benefits under Income Tax Act, 1961. You may however claim housing loan benefits in the form of interest payment and principal repayment under Sections 24 and Sections 80C of the Income Tax Act, 1961 read with the conditions laid out in the respective provisions.

Q. I am a 55-year-old working in a private company and getting a gross salary of 20 lakh per annum. I’ve taken home loan and paying ₹16,000 EMI, holding policies in LIC etc., and completing 80C limits of ₹1,50,000 pension scheme of ₹10,000 per annum. Still, I am paying ₹3,28,650 as tax per annum. Kindly suggest any scheme to reduce my tax amount and improve my after retirement benefits.

Vasudevan

A. The only other investment scheme that gives both tax deduction and post retirement benefits is voluntary contribution to National Pension Scheme (NPS). You may contribute up to ₹50,000 per annum to claim deduction under Section 80CCB(1B) of the Income Tax Act, 1961, over and above the limit of ₹1,50,000 under Section 80C of the Income Tax Act, 1961 limits read with Section 80CCE of the of the Income Tax Act, 1961.

(N. Sree Kanth is partner, GSS Associates, Chartered Accountants, Chennai)

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