INCOME TAX SLAB

Query 1]

1. What happens if Rural Land purchased for calming Deduction U/s 54 is sold within a period of 3 years) as sale of rural land is exempt from capital gain Tax?
2. What will be the consequences if Part of Land is sold and the other Part of Land is retained for construction of House Property?
3. Is it good to make two purchase agreements for Purchase of above land (i.e., one for Sale and one for construction of House). Is there any violation of Section 54? [kini1@gmail.com]

Opinion:

1. It may be noted that only Rural AGRICULTURAL LAND, satisfying certain conditions as to its location & population of the area, is not a capital Assets. Being not a capital assets, the transfer of said Rural Agricultural Land doesn’t give rise to any Capital Gain & as a result no income tax liability arises on sale of Rural Agricultural Land.
2. The Plot or a piece of Non Agricultural Land, even if it is in Rural Area, is a capital assets and surplus arising on its sale/transfer would be taxable as Capital Gain.
3. It may be noted that if exemption is claimed u/s 54 by investing the amount of LTCG in purchase of a residential house property (which includes the plot cost as well) & the house property so purchased if transferred within a period of 3 years from the date of its acquisition, the amount of claimed exempted earlier would be taken back.
4. On the basis of the facts mentioned by you in the query, the best advisable way could be to execute the two sale deed for two different plots. One for construction of the house property on which you will be claiming an exemption u/s 54 AND the second one for Re-sale.

Query 2]

I am a retired Government pensioner. My total income from all sources including FD in bank is less than five Lacs per anum. Bank deducts TDS from my income. Total interest received is more than Rs. 10,000/- Please intimate whether I have to file IT return in the A.Y. 2011-2012? [papiadasgupta@yahoo.com]

Opinion:

As your interest income exceeds Rs. 10,000/-, you would be required to file the return of income even though your income is below Rs. 5 Lacs. You may further refer Tax Talk dated 18.07.2011 wherein the contents of the circular exempting the employee with income up to Rs. 5 Lacs from filing income tax returns has been aptly elaborated.

Query 3]

What is the age limit for senior citizen as per the Income Tax Law? I understand that it was earlier 65 years and now 60 Years. From which year, it has been made applicable? What is the exemption limit for senior citizen for the F.Y. 2010-11 & 2011-12? [pravin.aparajit@gmail.com]

Opinion:

You are right. The age limit for recognizing the senior citizen has been reduced from 65 years to 60 years from the A.Y. 2012-13 (F.Y. 2011-12). For the A.Y. 2011-12 (F.Y. 2010-11), the age limit for recognizing the senior citizens is 65 years only. Further, a new category of “very senior citizen” is also create w.e.f. F.Y. 2011-12.

The income tax slab for senior citizen in the F.Y. 2010-11 & F.Y. 2011-12 are as under:

1] F.Y. 2010-11:
BASIC EXEMPTION LIMIT FOR SENIOR CITIZENS (65 Years or More)

INCOME SLAB	TAX RATE
Up to 2,40,000	Nil
From 2,40,001 to 5,00,000	10%
From 5,00,001 to 8,00,000	20%
Above 8,00,000	30%

2] F.Y. 2011-12:
A] BASIC EXEMPTION LIMIT FOR SENIOR CITIZENS (60 YEARS OR MORE BUT LESS THAN 80 YEARS)

INCOME SLAB	TAX RATE
Up to 2,50,000	Nil
From 2,50,001 to 5,00,000	10%
From 5,00,001 to 8,00,000	20%
Above 8,00,000	30%

B] BASIC EXEMPTION LIMIT FOR VERY SENIOR CITIZENS (80 YEARS OR MORE)

INCOME SLAB	TAX RATE
Up to Rs. 5,00,000	Nil
From 5,00,001 to 8,00,000	20%
Above 8,00,000	30%

Query 4]

I am a retired PSU executive. I am getting pension of Rs. 24,000/- pm and residing in a rented house, paying Rs.7400/- pm as House Rent. Please clarify whether I am entitle to get any rebate in tax for Houser Rent Paid? [gcmaji@gmail.com]

Opinion:

Any individual who is not in receipt of HRA from the employer is entitle to the benefit of deduction of rent paid for residential accommodation from its income u/s. 80GG of the Income Tax Act.
The condition precedent to claiming deduction under this section is:-
a] He has to prepare a declaration in Form No.10BA.
b] He or his minor child, spouse or HUF of which he is a member, should not be owner of a house at the place where he ordinarily resides or performs his duties; or he should not be owner of any house at any other place, the income therefrom is to be determine under section 23(2) (a) or, as the case may be, under section 23(4) (a) ( i.e.income from self-occupied house property).
Amount of deduction – The deduction admissible shall be the lower of the following: –
(i) house rent incurred in excess of 10% of “Total Income”; or
(ii) Amount at 25% of “total income”; or
(iii) Rs. 2000 per month.
[Note: The term “Total income” means total income after allowing all deductions expect the one provided under this section itself.]

INCOME TAX SLAB

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