My spouse’s PPF will mature in April. She needs to switch ₹23 lakh to my senior citizen financial savings account and stability ₹7 lakh to our daughter. What would be the tax place implications for all of us?
As from April, curiosity shall be earned in my title. I ought to and shall be liable to pay tax. Please make clear in whose revenue curiosity shall be added. – Chander Gupta
When you, your spouse, and your daughter qualify as residents of India for tax functions, and your daughter shouldn’t be a minor (i.e., she is eighteen years or older), the next tax implications apply to the receipt and switch of PPF maturity proceeds:
Exemption on PPF maturity proceeds: The maturity proceeds from the Public Provident Fund (PPF), being solely funded by your spouse, shall be fully exempt from tax in her fingers.
Tax remedy of reward transfers: In case your spouse transfers the PPF maturity proceeds to you and your daughter as a present, it is not going to entice any tax legal responsibility. Since presents acquired from specified kinfolk (reminiscent of a partner or mum or dad) are exempt from taxation, the quantities acquired by each you and your daughter is not going to be taxable in your respective fingers.
Taxation of curiosity on gifted funds:
For you: Any curiosity earned on the gifted funds shall be topic to the clubbing provisions of the Earnings Tax Act. Which means the curiosity revenue generated from the funds gifted by your spouse shall be added to her revenue and taxed at her relevant tax charge. Nevertheless, when you reinvest this curiosity to generate additional revenue, such secondary revenue shall be taxable in your fingers.
In your daughter: Since she shouldn’t be a minor, any curiosity revenue earned on the gifted funds shall be taxable in her personal fingers and never topic to clubbing provisions.
I’ve paid an indemnity bond to my earlier employer. Technically it isn’t revenue and moderately a revenue for my employer. Will I get a tax exemption for it?
Primarily based on the restricted particulars supplied in your question, it’s assumed that you’ve got made a cost in the direction of an indemnity bond to your employer because of the non-fulfilment of sure pre-agreed employment phrases that have been a part of your employment contract.
Beneath the revenue tax legislation, there is no such thing as a particular provision permitting a deduction or exemption for funds made to an employer underneath an indemnity bond. Since such funds come up from the non-fulfilment of pre-agreed contractual obligations, they’re usually handled as an software of revenue moderately than a diversion of revenue by overriding title, making them ineligible for tax deduction.
Nevertheless, courts have issued differing rulings on tax deductions associated to recoveries reminiscent of signing bonuses and see pay, relying on the particular information of every case.
Within the absence of a transparent deduction or exemption underneath the Earnings Tax Act, there’s a prevailing view that funds made underneath an indemnity bond because of the non-fulfilment of employment circumstances will not be deductible from taxable revenue.
It’s advisable to fastidiously assess the particular phrases of your settlement and the information of your case earlier than figuring out the tax remedy of such funds.
Parizad Sirwalla is accomplice and head, international mobility companies, tax, KPMG in India.
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