I have purchased life insurance policies for my wife and I. Can I claim a tax benefit on both? My wife is a homemaker.
An individual can claim tax deduction from total income in respect of payment made towards insurance premium under section 80C of the Income-tax Act, 1961, subject to an overall cap of Rs.1.5 lakh per annum. The deduction from total income can be availed towards payment of insurance premium for self, spouse and children.
So yes, you can avail a deduction from your total income subject to an overall cap of Rs.1.5 lakh per financial year (FY) for the total premiums paid.
I have worked in a company for six years. I am taking a break for studies now and want to withdraw my provident fund (PF) money. Will I be taxed?
PF withdrawal is taxable if done without rendering continuous service for five years. However, if the accumulated PF balance maintained with the old employer is transferred to the PF account of the current employer, then the period of previous employment is also included as part of continuous service and accordingly the period of five years is calculated. In your case, as the total period of services with the employer has been more than five years, you will not be taxed on withdrawal of the accumulated PF balance. But report the accumulated PF withdrawal in the your tax return to be compliant from reporting perspective.
Also, the withdrawal of the PF will be as per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which requires you to have a non- employment period of two months after leaving your job.
My parents gifted me Rs.75,000 on my birthday, which I want to invest. Will my father (from whose account the money was credited to mine) and I get taxed?
We have assumed that you are above the age of 18. Under section 56 of the income-tax Act, any sum of money that exceeds Rs.50,000 received by an individual during an FY without consideration, is taxed under the head ‘Income from other sources’ in the hands of the recipient. But an exemption is allowed if the cash is received from a relative, including, parents of the individual. Accordingly, there should not be any tax implication in your or your parent’s hands. However, any subsequent income from investment of the money shall be taxable in your hands depending on the nature of income.
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