Your queries: Income Tax – Show PPF, gratuity proceeds in ITR
* On retirement, I will get a provident fund and gratuity. Will the receipts be tax-free? How should I mention the receipts in my ITR?
In the hands of government employees, gratuity and PF receipts on retirement are exempt from tax. For non-government employees, gratuity is exempt subject to the limits prescribed in the Income Tax Act and PF receipts are exempt from tax if received from a recognized PF after rendering continuous service of not less than five years. Even if the amounts are not reflected in Form 16A, the same shall have to be disclosed in ITR. The details have to be furnished by selecting the appropriate category under the “Exempt Income” tab under the Salary Head of the relevant ITR Form. If disclosed as such, the ITR utility shall not include the same in taxable income.
How do I transfer shares to the demat accounts of my daughter and NRI son?
—Arvind Joshi
Since shares are considered “movable property”, it is not mandatory to execute a gift deed. However, in order to create a legal record, it is best to execute one. A simple acknowledgement may also serve the purpose. Also, capital instruments can be transferred to NRIs by way of gift, subject to satisfaction of certain conditions and guidelines of RBI in this regard.
* I bought a flat in December 2020. I have utilised the capital gain accrued from a previous sale of residential property. How do I show it in my ITR?
—Vipul Sharma
To avail the exemption under Section 54, capital gains on sale of property have to be re-invested in new residential property within the prescribed time limit. The Income Tax Act allows individuals to park the funds in the Capital Gain Account Scheme and claim exemption. Therefore, the particulars of sale of property and subsequent investment in new house property (like cost of new property/ date of purchase or construction/ amount of unutilised capital gain deposited in the Capital Gain Account Scheme) have to be disclosed in the Income Tax Return of the year in which the capital gain arises (i.e. the year of sale). No disclosure is required on the subsequent purchase of the property.
* I received Rs 50,000 as long-term capital gains. As LTCG up to Rs 1 lakh is tax-exempt, do I still have to show that in my ITR?
Long-term capital gains on the sale of listed equity shares and units of equity-oriented mutual funds (held for a period of more than 12 months) up to Rs 1 lakh are not taxable. However, you have to disclose income from all sources while filing a return of income. The ITR utility shall automatically grant an exemption and you shall not be required to pay tax.