By Chirag Nangia
Do we need to declare interest from post offices savings account, PPF and monthly income scheme (MIS) in ITR? If so, under which head and which ITR form?
A taxpayer is required to disclose income from all sources while filing an ITR, even if deduction/ exemption is available regarding such income. So you must disclose interest from savings account, PPF and MIS in the ITR. Interest income from savings account in post office and MIS is supposed to be reported in ‘Schedule OS’ whereas interest from PPF (being exempt) is to be disclosed as ‘other exempt income’ in Schedule EI of the relevant ITR form. These schedules are the same in all ITRs.
ITR 1 may be filed if your total income is up to Rs 50 lakh and comprises income only from salaries, one house property, other sources (interest, etc.) and agricultural income up to Rs 5,000. In case you also have income under the head ‘capital gains’, you will be required to report particulars of income in ITR 2. Alternatively, if you derive income from business/ profession then disclosure shall have to be made in ITR 3. Section 80TTA entitles an individual to claim deduction of the interest earned on savings accounts held with a bank, cooperative society or post office, up to Rs 10,000. In case of senior citizens, this limit is enhanced up to Rs 50,000 as per Section 80TTB. These deductions may be claimed, while filing ITR.
l I paid `2 lakh a year for 10 years for a pension plan where I can commute 1/3 which is tax free and the balance has to be invested in monthly pension. The fund value is `33 lakh. Is the commuted portion of the corpus (`11 lakh) tax free or 1/3 of the premium paid (`6.66 lakh) tax free?
Commuted value of pension received by government employees is fully exempt. However, commuted value of pension received by any other employee would be exempt in the following manner:
a) cases where employee receives gratuity- commuted value of 1/3rd of pension which the employee is normally entitled to receive
b) in any other case- The commuted value of 1/2 of the pension which the employee is normally entitled to receive.
Consequently, if you receive gratuity, 1/3rd of the corpus shall be tax exempt.
The writer is director, Nangia Andersen India. Send your queries to [email protected]