Asset transfer to wife won’t help

QI am a retired person, aged about 68, and my wife is aged about 66. All my earnings and savings were from outside India ( NRI) where I had worked for my living. Now, since I became an Indian citizen and settled in India, I have transferred all my NRI deposits to normal savings and fixed deposits. Bank interest for the deposits and some mutual funds and share trading and some fixed deposit interests are the only income. I am already paying tax for this income. Can I transfer half of my deposits in my wife’s name in the bank and make her also an incometax assessee? Will that help me in saving tax? I am paying over ` 1.5 lakh for my son’s college tuition fees. We have bought medical insurance policies. Are these deductible from income? SRIKANTH RAJ

Via email

A) The transfer of half of your deposits, or shares, or fixed deposits in your wife’s name will not help you in saving taxes in your account. Section 64( 1) of the Income- Tax Act contemplates of including the income of one spouse in the hands of the other if assets are transferred without adequate consideration or in connection with agreement to live apart.

Tuition fees paid to university, college, school or other educational institution situated within India for the purpose of full time education of your son can be claimed as a deduction under Section 80C subject to a ceiling of ` 1.5 lakh. However, such payment made towards development fees or donation or payment of similar nature will not be eligible for any deduction, if paid outside India under any section.

According to Section 80D, medical insurance premium paid on the health of the assessee or/ and his spouse from financial year 2018- 19, who are senior citizens can be claimed upto ` 50,000 (` 25,000 for others) and an additional ` 50,000 in case the premium is paid for parents as well, whether dependent or independent. ■

QI am an accounts manager working in a private limited company. An individual who has a taxable income in one financial year, but subsequent years does not have a taxable income. Is it necessary to file returns every year even though he does not have a taxable income?

I heard that once a PAN is allotted, a person must file his returns even if he does not have a taxable income. Is it true? Can I skip filing returns since my income is less than taxable income?

A) According to Section 139( 1), every person has to file a return of income if his or her total income or the total income of any other in respect of which he is assessable under this Income- Tax Act during the previous year exceeds the maximum amount which is not chargeable to income- tax. However, if the total income is below the threshold limit mentioned above, it is not necessary to file a return of income even if PAN is allotted to such person.

Q■ SUBBA RAO Via email

If a house is sold 10 years after its construction to avoid long- term capital gains tax, should the total sale value to be invested in NHAI bonds or only the amount of gains arrived at using inflation index? PRASHANT Via email

( A) According to Section 54 EC of the Income- Tax Act, capital gains ( after indexation) arising from the transfer of a long- term capital asset will be exempt, if the assessee within six months of transfer or sale, invests them in capital gains bonds of National Highways Authority of India ( NHAI) or Rural Electrification Corporation ( REC). It is pertinent to note that the amount of investment in these bonds cannot exceed ` 50 lakh.

( The writer is a Hyderabad- based chartered accountant. He can be reached at info@ rathiandmalani. com)