|Save additional tax by investing in NPS|
TAX TALK-11.07.2016-THE HITAVADA
CA. NARESH JAKHOTIA
Save additional tax by investing in NPS
My parents joint holder of residential house sold property in February 2016. LTCG was 5 Lakh each. My parents wanted to invest in capital gain bond u/s 54EC. My father expired in June 2016 before investing in bonds. My mother is now legal heir. How can she invest in capital gain bonds on his behalf? She has made her part of investment in LTCG bonds. As a legal heir she needs to file returns for AY 16-17. Please guide. [Yogendra Kale- ]
1. Even death doesn’t absolve person from the tax liability. After the death of your father, the income tax return would be required to be filed by the legal heir in a representative capacity. Obligation to file Income tax return and liability to pay taxes on income of deceased is same as that of alive person. All the tax payments like outstanding tax demand, advance tax, self assessment tax, etc are also to be made by the legal representative. Further, the legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he was alive as automatic charge is generated over the property left [Section 159 of the Income Tax Act-1961].
2. Your father had earned long term capital gain tax. The question arises as to whether legal heir can claim long term capital gain exemption by investing the LTCG amount in NHAI/REC specified bonds?
3. Where a person had sold the property during his life time and the legal representative fulfills the required stipulated conditions for exemption (u/s 54, 54F or 54EC etc), the benefit of exemption could be granted to the legal representative in view of following judicial pronouncements
a] C.V. Ramanathan Vs. CIT (1980) 125 ITR 191 (Mad)
b] Late Mir Gulam Ali Khan Vs. CIT (1987 165 ITR 228 (AP)
c] CIT Vs. R. Subramanya Bhat (1981) 165 ITR 37 (Kar).
I am a govt. Employee and I am member of NPS. My employer CG State Power Generation Co. Ltd. have deducted Rs. 82,277/- from my salary as employee’s contribution (10% of Basic + DA) under NPS in FY 2015-16.
I have also invested Rs. 1,50,000/- in PPF in FY 2015-16 on which I want to claim tax rebate under section 80C. Recently I have received Form -16 given by my employer, in which deduction of employee contribution of Rs. 82,277/- plus PPF investment Rs. 1,50,000/- is shown under section 80C. However the deduction of employee contribution Rs. 82,277/- should be shown under section 80 CCD (1B). They have also not given the benefit of extra deduction of Rs. 50,000/- under section 80 CCD(1B) and deducted extra TDS. Now, what I want to know is, I have exhausted my limit of Rs. 1,50,000/- under section 80C by investing in PPF, to get extra deduction of Rs. 50,000/- under section 80 CCD(1B), can I use my employee contribution Rs. 82,277/- which is deducted from my salary as employee’s contribution (NPS), means can I use this Rs. 82,277/- not under 80C and can I use it under 80CCD (1B)? Should I go for correction in Form - 16 from my employer or should I file the Income tax return and claim the refund? [S.K. Sahu- NC 128, AB Type, CSEB Colony Korba East-CG 495677]
[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at
SSRPN & Co
10, Laxmi Vyankatesh Apartment
C.A. Road, Telephone Exch. Square
or email it at firstname.lastname@example.org]