Summary of this article
Profits in liquid funds after March 31, 2023, taxed STCG.
Gratuity and leave encashment partially exempt for PSU employees.
Gifts from grandfather are exempt; interest income taxable for recipient.
I have invested a lump sum amount in a liquid fund and have redeemed it whenever I required the money. Will it lead to any taxation?
The taxability of your profit on liquid funds will depend on when you made the investments. In case the investments were made on or before March 31, 2023, the profits shall be taxed at a flat rate of 12.50 per cent without any indexation if redeemed within two years. If redeemed within two years the same shall be treated as short term capital gains (STCG) and taxed at the slab rate applicable to you.
In case the investments were made after March 31, 2023, the profits shall be taxed as STCG and taxed at the slab rate applicable to you irrespective of the holding period.
I resigned from a Defence public sector undertaking (PSU) after completing a service of eight and three months and joined a private IT company thereafter. My previous employer paid me gratuity and leave encashment. Are the amounts received by me under two heads taxable?
For central and state government employees, the gratuity and leave encashment are fully exempt from taxation irrespective of the amount. However, a PSU employee is not the same as a government employee.
As you were working in a PSU and not as a central or state government employee, gratuity exempt would be restricted to half-month’s average salary for each completed year of service subject to a maximum of Rs. 20 lakh in aggregate from all the employers taken together during your lifetime.
The leave encashment for 10 months is exempt subject to a maximum of Rs. 25 lakh in aggregate received from one employer or more taken together at the time of retirement. Retirement in the context of leave encashment includes resigning or leaving the employment otherwise.
I am 32 years old, married, self-employed. I have been filing my income-tax return (ITR) for the last 7-8 years. My income gets taxed at 20 per cent. If my grandfather, who is taxed at 30 per cent makes a gift of Rs 30 lakh to me, and if I invest the same in a bank fixed deposit, will the interest received from it be treated as my income or this would be treated as income of my grandfather due to clubbing provisions?
Gifts in aggregate in excess of Rs. 50,000 in a year are treated as income for the recipient. However, gifts received from certain specified categories of relatives are outside the scope of this provision. Such gifts received are not treated as income. Grandfather is covered in the definition of specified relatives and thus you do not have any tax liability on the gift of Rs 30 lakh received from your grandfather.
Moreover, as you are a major, the provisions of clubbing applicable to minors will not be applicable, and the interest income received by you will be taxable in your hand under the head “Income from other sources”.
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.)
