How to avail benefits for NPS contributions done by your employer on behalf of you? Answers to your personal finance queries

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Q. I’m a State authorities worker. I deposited ₹1.50 lakh in my PPF account. The division is deducting ₹72,000 in direction of my NPS account. (This is the obligatory 10% fundamental + DA deduction). Can I declare a deduction of ₹50,000 u/s 80CCD(1B) on behalf of this NPS saving? I’ve not made every other voluntary deposit on this account.

A. Amounts contributed by your employer in direction of NPS are lined below 80CCD(1) and 80CCD(2) in direction of worker and employer contributions, respectively. Any voluntary contribution in direction of NPS shall solely be lined below 80CCD(1B), thus the extra ₹50,000 profit prescribed can’t be claimed by you below 80CCD(1B) as no voluntary contribution has been performed.

However, advantages may be availed for NPS contributions below 80CCD(1) and 80CCD(2) performed by your employer on behalf of you and your employer within the following method.

80CCD(1) limits are clubbed with 80CCE limits and as you could have exhausted the identical by your contribution in direction of PPF (below 80C), you’ll not be eligible for any declare over and above ₹1.50 lakh. With respect to 80CCD(2), it’s possible you’ll declare a most deduction of 10% of fundamental plus DA (for non-central authorities staff) and the identical is outdoors the purview of ₹1.50 lakh (80CCE) and ₹50,000 (80CCD(1B)). You could take the break-up of the ₹72,000 out of your employer and declare the deduction based mostly on the reasons offered above.

Q. My daughter has acquired some quantity from the sale of unlisted shares owned by her. She already owns a residential flat. She has held the shares for greater than two years. Can she purchase one other residential property or 54EC bond to assert tax exemption?

A. As the unlisted shares have been held for over 2 years, they’re long-term capital property. She is eligible for exemption below part 54F as she owns just one residential property as on the date of sale of the unlisted shares and exemption below part 54EC can even apply to her offered the funding is made inside 6 months of date of sale.

Q. My daughter (married) is learning DNB (put up commencement after MBBS) in a non-public hospital. This course is performed by the National Board of Diploma of G0I. This is a 3- yr course. She is paying ₹1.25 lakh as tuition price yearly.

She can be getting ₹50,000 as month-to-month stipend. In 2019-20 PY, she acquired ₹5 lakh in stipend. The hospital authorities are deducting I-T month-to-month.

1) I wish to know whether or not the stipend revenue is taxable?

2) lf so, can the ‘ tuition price’ be deducted from gross revenue?

3) As supply deduction of tax has already been made, she is certain to file returns. If the stipend shouldn’t be taxable, how can this revenue be proven within the returns?

4) If the tutoring price can’t be proven as deduction in her return, can the identical be performed in my return?

A. 1. Stipend acquired by medical doctors pursuing greater training from personal hospitals is a taxable revenue and thought of as emoluments in direction of performing duties like a full-time physician whereas gaining expertise and isn’t perceived as monies acquired in direction of scholarship for training. Only quantities acquired in direction of scholarship is exempt below tax. Income tax is to be paid in accordance with slab charges relevant for people.

2. No, deductions for fee of tuition price shouldn’t be allowed from stipend revenue as this tuition price paid shouldn’t be linked with the incomes of the stipend.

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3. If the hospital is offering Form 16, the identical is to be declared below “Income from Salaries”, if supplied with Form 16A, the identical is to be declared below “Income from Other Sources” or “income from business or profession” below relevant ITR.

4. Deduction in direction of tuition price paid for 2 youngsters may be claimed by the dad or mum if the price is paid to a registered college, college or an training establishment based mostly in India for full-time training programs below Section 80C. In your case, as your daughter is paying the price herself, you can not declare any deduction on this regard;

(The writer is companion, GSS & Associates, Chartered Accountants, Chennai)

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This post was last modified on August 30, 2020 10:40 pm

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