Query 1]

I have two specific queries to make, if you kindly enlighten me, I will be ever grateful:

  1. I am a retired Govt. employee, senior citizen. My wife is also a Senior Citizen. She wants to have one single Fixed Deposit of Rs. 6.00 Lacs with 10% Interest/year. Can she get TDS exemption on submitting 15H form to the Bank? Some body told me that, if the total interest on fixed deposit in a particular Bank, for a person, is Rs.50000/- or more, tax will be deducted by Banks as TDS, in spite of submitting 15H form. She has PAN Card.
  2. Can you tell us how to make a “Will”. Can a Will be made on plane paper? Or has to be made on Govt. Stamp paper only? If on stamp paper, what will be the denomination of that Stamp paper? Is it mandatory to register the Will? What is the legality, if the Will is made on plane paper? []


  1. Your wife can submit the Form No. 15H if tax on her total income during the relevant financial year is Nil. Ensure to quote her Permanent Account Number (PAN) on the Form No. 15H. There is no bar of Rs. 50,000/- as mentioned in your query. Bank have to deduct tax at source if the interest amount exceeds Rs. 10,000/- and the depositor doesn’t furnish Form No. 15G/15H with PAN quoted thereon.
  2. It may further be noted that where an asset is transferred by an individual to his spouse directly or indirectly, otherwise than for an adequate consideration or in connection with an agreement to live apart, any income from such asset is deemed to be the income of the transferor. [64(1) (iv) of the Income Tax Act-1961]. So if the amount to your wife is given by you otherwise than for adequate consideration then the income from bank FDR will be clubbed with your income.
  3. Wills can be made on a plane paper also. Alternatively, it can be executed on stamp paper of any denomination. Wills remains valid even if it is un-registered provided it is executed properly. Registration of will is not compulsory under the Indian Registration Act. Following few care & caution may be taken while making the wills:
    a] Though, Registration is not mandatory, it is always advisable to get the will registered as it ensures authenticity, sanctity & genuineness.
    b] Wills should be signed by the testator (maker) in the presence of atleast two witnesses.
    c] The witnesses should express that the wills has been signed in their presence in a good health of mind. Their name and addresses should be given in full.
    d] Each page of the will should be signed by the testator.


Query 2]

I am shortly going to retire under VRS from Central Government Employment. I will be getting amount pertaining to provident fund, Gratuity, Commutation of pension, Insurance and Encashment of privilege leave to my credit (240 days max.). Kindly guide me which are the amounts exempted fully under TDS and whether encashment of privilege leave is fully exempted under TDS provision and under which section? []


A] Provident Fund:
Lump sum payment received from Statutory Provident Fund received by the Government employee is fully exempt from income tax.
B] Gratuity:
In the case of Government employee, Gratuity amount is exempt from income tax u/s 10(10)(i) of the Income Tax Act- 1961.
C] Commutation of Pension:
Commuted pension received by a employee who has joined the Central Government before 01.01.2004 is fully exempt from tax u/s 10(10A)(i).
b] The provision in respect of employee who has joined the Central Government on or after 01.01.2004 are covered by the New Pension scheme. The prominent feature of the new pension scheme is as under:
i) New pension scheme is applicable to new entrants to Government service or any other employer. As per the scheme, it is mandatory for persons entering the service on or after 01.01.2004, to contribute 10% of salary every month toward their pension A/c. A matching contribution is required to be made by the employer to the said A/c.
ii) Contribution by the employer to the notified pension scheme is first included under the head “Salaries” in the hands of employee.
iii) Such contribution is deductible (to the extent of 10% of the salary of the employee) u/s 80CCD.
iv) Employee contribution to the notified pension scheme (to the extent of 10% of the salary of the employee) is also deductible u/s 80CCD.
v) When pension is received out of the aforesaid amount, it will be chargeable to tax in the hands of the recipient.
vi)No deduction will be allowed u/s 80C in respect of amount on which deduction has been claimed u/s 80CCD. Also, the aggregate amount of deduction u/s 80C + 80CCC + 80CCD cannot exceed Rs. 1 Lacs.
D] Insurance:
Under Section 10(10D) of Income tax Act, 1961, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax. However, this rule does not apply to following amounts:

a) sum received under Section 80DD(3), or
b) any sum received under a Keyman Insurance Policy, or
c) any sum received other than as death benefit under an insurance policy which has been issued on or after April 1 2003 and if the premium paid in any of the years during the term of the policy is more than 20% of the sum assured.

E] Leave Salary:
In the case of Central/ State Government employee, any amount received as cash equivalent of leave salary in respect of period of earned leave at his credit at the time of retirement/ superannuation is exempt from tax u/s 10(10AA)(i)

Exempt amount of leave salary as calculated above will not attract the T.D.S provision and the same can be paid without deducting tax at source (T.D.S).


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