Dividend from MFs tax exempt
Q I was in the United States for 15 years and returned to India in 2012. During the FY 201718, I received dividend from a few Indian companies and also from foreign companies, in which I invested during my stay in the US. Apart from above, I received dividend from equity mutual funds in India. How will this income be taxable? NARESH Hyderabad
The dividend received from Indian companies will be taxable only if it exceeds ` 10 lakhs under the head ‘ Income From Other Sources’. The dividend received from foreign companies will be taxed under the same head and normal slab rates will be applicable to such income. Further, dividends received from Indian equity mutual funds are fully exempt. Q I purchased a flat taking housing loan in February 2017. However, I am likely to receive the possession of the flat in November 2018. I want to know whether the interest benefit will be available to me for FY 2017- 18 or FY 2018- 19? SHASHIKANTH Hyderabad
You will not be entitled to claim interest on housing loan for the assessment year 2018- 19 ( FY2017- 18). As per the explanations to provision of Section 24 ( b) of the Income Tax Act, “Where the property has been acquired or constructed with borrowed capital, interest, if any, payable on such capital borrowed for the period prior to previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as a deduction under any other provisions of this Act, shall be deducted under this clause in equal installments, for the said previous year and for each of the four immediately succeeding previous years.” Interest pertaining to FY2016- 17 and 2017- 18 will be deductible in five equal installments beginning from FY 2018- 19 apart from the total interest payable for the FY2018- 19.
Q
I have a fixed deposit with State Bank of India. The bank wants to deduct TDS at the rate of 20 per cent since I do not have a PAN. Whether the splitting up of my investments in such a way that my income from each such investment is below tax deductible limit help my cause? What is the other option, if I apply for a PAN, will it be necessary that I file my income tax returns compulsorily? SHUBHAM Chennai
According to Section 206AA ( 1), a tax deduction at 20 per cent or TDS rate, whichever is higher, is mandatory if the recipient does not furnish his Permanent Account Number ( PAN) to the deductor. Sub section 2 and 3 would render a declaration without the PAN as invalid and the deductor will be obliged to deduct tax at source on “any sum or income or amount on which tax is deductible”. It is suggested that you apply for PAN immediately so that you stay away from unnecessary hassles. Otherwise, you may need to spread your investments with various banks, which again would become inconvenient and tedious. You need to file your income tax returns only if your income exceeds the threshold limit specified in the Income- Tax Act.