All residents must pay tax
Q I am an Indian citizen who returned to India in 2011 after working for 31 years in the UK. From May 2017, I have been receiving a UK government pension. As per the India-UK Double Taxation Agreement, 1994, I do not have to pay tax in the UK but in India. Accordingly, the UK pension department is sending the whole amount directly to me. I have earned `4.72 lakh in financial year 2017-18. Will I have to pay the same tax rates as a normal Indian citizen who has always been resident in India? How much will be the quantum of tax for financial year 2017-18? RAMMOHAN P. Via email
A) As per the provisions of Indian tax laws your residential status is that of a “Resident”. Your entire global income will be taxed in India and the normal rates of tax applicable to an individual assessee will also be applicable to you. You can of course claim deduction upto `1.5 lakh under Section 80C by investing in the various specified instruments like LIC, NSC, PPF, ELSS etc. For determining the quantum of tax liability you need to compute your total income i.e. your pension and other income, if any and claim various deductions provided under the I-T Act.
Your tax liability on `4,72,000 for FY 2017-18 works out to `11,433 (including education cess). If you happen to be a senior citizen (completed at least 60 years of age before March 31. 2018) your tax liability will be `8,858 (including education cess). Further, in case you happen to be a very senior citizen (completed at least 80 years of age), your tax liability shall be nil.
Q I am 92 years old pensioner. Till last year, my total income, including pension, was within `5 lakh. After the 7th pay panel, my income may cross `5 lakh. Apart from this, I get a rental income of `30,000 and interest from fixed deposit. Since I never filed tax returns, please let me know what deductions are allowed for me. RAVI MALHOTRA Via email
A) Your return has to be filed showing income under various heads of income i.e., Pension under the head “Salaries”, Rental Income from house under the head “Income from House Property” and Interest income from bank under the head” Income from Other Sources”. Your income from house property after deducting the property tax will be eligible for a mandatory deduction of 30 per cent. You can claim deduction under Section 80C for any contribution towards PPF, LIC, ELSS etc., upto `1.5 lakh mediclaim under section 80D, etc. After claiming all deductions, you need to pay tax only if your income exceeds `5 lakh. Since you don’t have business or profession, you are not liable to pay advance tax.
(The writer is a chartered accountant. You can your send queries to info@rathiandmalani.com)