I have opened a recurring deposit of Rs 10,000 per month in a post office for five years and will get Rs. 6 lakh plus an interest of Rs 1,15,745. Will the entire amount of Rs. 7,15,745 received on maturity be taxable?
The full amount of 7,15,745 will not be taxable in your hand at the time of maturity. Only the interest of Rs. 1,115,745 will be taxable in your hand at the time of receipt of such maturity proceeds.
In case you do not offer the accrued interest on such recurring deposit for tax in each of the year which has to be done consistently year after year.
You have an option to offer the proportionate interest accrued in each of the financial year for taxation purposes. Please request your post office to give you a certificate of interest accrued at the end of each financial year after the end of the year.
It is advisable to offer the interest every year so that your tax liability does not jump all of a sudden in the year of maturity.
In 1999, my grandfather created a Hindu Undivided Family (HUF) with my grandmother and my father as coparceners. A commercial property was also acquired by this HUF. In 2010, my father created his own HUF, with my mother and me as coparceners. In 2015, my grandfather passed away. In 2024, my grandmother also passed away. So now, my father is the only survivor of the older HUF. Can the property owned by the older HUF be transferred to the new HUF or it has to be transferred to the sole survivor only?
Though both the HUFs have been created legally, as an HUF needs a minimum of two coparceners under the income tax laws, however, it should be noted that only the persons who are born or come by adoption in the family are treated as coparceners. Other members like wife, mother and daughter in-laws are treated as members only.
An HUF consists of four generations of persons who are lineally descended from a common male ancestor. You became coparcener of the older HUF upon your birth. So at present, there are two HUFs in existence with the same coparceners. Do note that you also have rights in the assets of the older HUF.
Both the HUFs can run without there being any need to dissolve the older HUF. Since the HUF assets belong to all the coparceners, the same cannot be transferred to a single member unless it is done under a full partition of the HUF with the consent of all the coparceners. It cannot be transferred to the new HUF created by your father, too. Even if it is done, the market value of the property will be treated as gift in the hands of your father’s HUF and taxed as income of this new HUF.
I bought a residential house in 2015 which I want to sell for Rs 25 lakh. I want to deposit this amount in my savings account. I intend to move to a rented house for the time being and have planned to buy a new house later. Will this amount of Rs 25 lakh realised from the sale of the house be treated as taxable?
As you are planning to sell your house, which you have held for more than two years, the profits will be taxed as long-term capital gains Since the house was bought before July 23, 2024, you have option to pay tax either on the difference between your cost and the sale price at 12.50 per cent or at 20 per cent on indexed capital gains.
As you are anyway planning to acquire a new house, you can save by paying the tax on your LTCG if you buy a ready-to-move-in house within two years from date of sale of this house or get a new house constructed within three years from the date of sale of the house.
The money not utilised for acquiring the new house by the due date of filing of income tax return (ITR), which is generally July 31 of the subsequent year, has to be deposited in an account with banks under the capital gains scheme. You can use the money deposited in the account for paying for acquisition of the new house. If you do not want to acquire the house right now, you can still keep the money in your savings bank account till July 31, 2026. Please note that you are required to deposit the difference between the sale price and cost price for availing the exemption as indexation is not available for the purpose of claiming exemption.
The author is a tax and investment expert and can be reached on jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
