| The rates of income tax have been kept unchanged in the Budget 2007-08 with some changes in the basic exemption limit. Was there any proposal to increase the limit of Rs 1 lakh for tax saving investments? What are the positions of postal savings? |
Swapan Kumar Mandal, Howrah |
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| The basic exemption limit has been increased by Rs 10,000 to Rs 1,10,000 in 2007-08. Simultaneously, education cess has also been increased to 3 per cent from 2 per cent. There has been no change in the deduction limit under section 80C, which means one can claim deduction up to Rs 1 lakh by investing in PPF, NSC, life insurance policy premium, tax saving bank fixed deposits and ELSS. However, the limit on interest payment for TDS purposes by banks and post offices has been increased to Rs 10,000 from Rs 5,000. The interest rates on post office saving schemes have not been changed. |
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| Old shares |
| Do I have to pay long-term capital gains tax on shares acquired in 1989-90? If the sale proceeds of such shares are used to open a bank fixed deposit in my wife’s or daughter’s name, will the interest income be clubbed with my income? |
Amit Sen, Calcutta |
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| Section 10(38), inserted in the Financial Bill 2004, specifies that capital gains arising from the transfer of equity shares being held for more than 12 months are exempted from long-term capital gains tax. This exemption is, however, available only to those share transactions that were entered into on or after October 2004. In your case, the long-term capital gains tax exemption will not be available. However, you can take the benefit of cost indexation and reduce the tax outgo. |
| You can gift the sale proceeds of your shares to your wife and daughter for which you don’t have to pay any gift tax. In the process, the interest income will accrue only to them and will not be clubbed to your income. |
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| Gifts galore |
| My wife and I are both senior citizens. I want to gift her some cash. How much can I gift her in a year? What is the tax implication on her part? Do I show it in my tax return? |
C.R. Gupta, Calcutta |
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| You can gift your wife any amount of money, there will be no tax. You don’t have to show it in your returns either. |
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| If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001. |
