The author is a tax and investment expert
Interest received on PPF even beyond its maturity is tax-free. Deduction for stamp duty, registration fee and any other expenditure for the purpose of transfer of residential house is available under the overall limit of Rs. 1.50 lakh under Section 80C. Full amount of HRA received from employer is not tax-free
My Public Provident Fund (PPF) is maturing on April 1, 2024. What is the tax liability of the maturity proceeds of my PPF? I wish to use this money for my daughter’s wedding in the next three years. Where should I reinvest the maturity proceeds of my PPF so that it comes in handy for the wedding without any tax implications or at the minimum tax liability?
The full value of the maturity proceeds of your PPF will come tax-free in your hands.
Instead of closing your PPF account and withdrawing the money and investing it somewhere else, it is advisable that you extend the tenure of your PPF account without any further contribution. You will also be able to withdraw any amount, including the full amount in one or more instalments in future. But do note that not more than one withdrawal is allowed in a year. Since the interest received on PPF even beyond its maturity comes tax-free, it will also not have any tax implication for you even after an extension.
You can deposit the money withdrawn from your PPF during its extended period in a liquid mutual fund for use as and when needed. Do note that the interest received on liquid fund will be taxed at your slab rate.
I bought a flat for which I have taken a home loan. I have paid about Rs 80,000 as stamp duty and registration charges. I want to know whether I can claim the stamp duty and registration charges as deduction under tax laws.
Under Section 80C of the Income-tax Act, 1961, in addition to the principal component of the home loan repayment, you can claim deduction for any amount paid towards stamp duty, registration fee and any other expenditure for the purpose of transfer of the residential house. This deduction is available within the overall limit of Rs. 1.50 lakh along with other eligible items.
Do note that in case you go for the new tax regime, you will not get any deduction under Section 80C.
I am working in a multinational company (MNC) and earn around Rs 15 lakh annually. I stay with my parents. I have already exhausted the limits available under Section 80C and 80CCD (1B). The company pays me house rent allowance (HRA) as part of my salary. Can I claim exemption for HRA for the rent I pay to my father?
There is no restriction on one claiming HRA exemption in respect of rent paid to parents as long as the rent is actually paid, and the parents have offered the same for taxation.
You can claim HRA exemption in respect of rent paid for the property occupied by you and which is not owned by you.
Do note that the full amount of HRA received from your employer is not tax-free in your hands. The quantum of HRA exemption available to you would be restricted to the least of the following:
a) 40 per cent of basic salary (50 per cent in case the employee is residing in metro cities, such as Delhi, Mumbai, Kolkata, and Chennai).
b) HRA actually received by the employee.
c) The excess of rent paid over 10 per cent of basic salary.
The author is a tax and investment expert
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