Elderly can get `50K interest sop

QI have recently retired from my job at the age of 61. I am planning to put my savings in the Senior Citizens Savings Scheme (SCSS) in the name of my wife in addition to mine. She is not a income-tax assessee. As such do I need to pay income-tax on the interest earned in the deposits of my wife also? SUBHASH Via email

A) The deposit in your wife’s name will not help you in saving taxes as clubbing provisions of the Income-Tax Act will become applicable. According to Section 64(1)(iv) of the Income-Tax Act, all kinds of income that arises directly or indirectly to a spouse from assets transferred to her or him by an individual — without an adequate consideration or in connection with agreement to live apart — will be clubbed with the income of the individual who transferred such assets. According to the provisions of Section

80C of the Income-Tax Act, a deduction of up to

`1.5 lakh is allowed for investments made in Senior Citizens scheme,

For senior citizens, any interest earned in the above mentioned savings scheme or interest on deposits with banks or post office, an aggregate deduction of up to `50,000 is available under Section 80TTB of the Income Tax Act.

Q

How is income (profit) from trading in equities both in cash and F&O segment treated for income-tax purposes? Which ITR is to be used for reporting this income? Is it mandatory to report this even if there is a loss in a particular year? Y. PRASAD Via email

A) As per Section 43 (5), income from trading in futures and options is treated as normal business income. According to Section 43(5)(d), “An eligible transaction in respect of trading in derivatives referred to in clause (ac) of Section 2 of the Securities Contracts (Regulation) Act, carried out in a recognised stock exchange;” will not be deemed to be a speculative transaction

An eligible transaction means any transaction that complies with the following:

(A) carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary registered under Section 12 of the Sebi Act.

(B) which is supported by a time stamped contract note issued by such stock broker or sub broker or such other intermediary indicating in the contract note the unique client identity number allotted or PAN allotted under this Act;

A “recognised stock exchange” means a recognised stock exchange as referred to in clause (f) of Section 2 of the Securities Contract (Regulation) Act.

Therefore an assessee who incurs any loss from trading in futures and options is permitted to offset such loss against any other business income, with the exception of income earned through salary. Further, the loss to the extent not set off can be carried forward for set – off in the subsequent eight assessment years against business income.

However, the loss return needs to be filed before the due date of filing of return. Otherwise, an assessee will not be eligible to carry forward the losses to be set off against the business income of subsequent years. Any assessee earning income under the head “Profits and Gains from business or Profession”, the applicable ITR form is ITR-3.

Any interest earned in the senior citizens savings scheme or interest on deposits with banks or post office, an aggregate deduction of up to `50,000 is available under Section 80TTB