I am 51 years old and just quit my job after working for almost 27 years. I worked for my last employer for over 10 years. I decided to become an entrepreneur now. Without a new contribution to my EPF account, how long will this account continue to earn interest? How long will the interest earned on the body remain tax-free? What happens to this account and interest if I decide to take a job after a year or so?
Adhil Shetty, CEO of BankBazaar responds: You will continue to earn interest on your account balance until the age of 58, even if there is no new contribution to your EPF account. However, although the balance accumulated up to the date of retirement or the end of work is not subject to tax, any interest earned in the PF account after resignation or retirement or the end of work is subject to tax. The account will be suspended if you did not request a withdrawal within 36 months from the date you are eligible to apply. If the account doesn't work, you won't earn more interest. Despite the interest tax, EPF still has the highest return among small savings schemes. So it makes sense to make small periodic withdrawals to make sure the account doesn't break.
My CTC is Rs 14.95 lakh and I get Rs 1.11 lakh. Due to a 25% cut in pay, I will get Rs 83,000 over the next three months. I invest Rs 5,000 per month in PPF. I am paying a Rs 68 lakh home loan in partnership with my wife, and each pays Rs 28,000. I Pay Rs 5,000 for health insurance and Rs 12,000 for a time plan of Rs 1 crore. How can I save more taxes?
Jayant R.Pai, CFP, and Head - Products, PPFAS Mutual Fund, Answers: You currently benefit from some options under Sec 80C (PPF, Home Loans, and Life Insurance) and Sec 80D (Health Insurance). In addition, the department offers you 24 discounts on the interest component of your mortgage loan up to Rs 2 lakh. Assuming your living expenses are covered, there are three ways to increase your tax savings,
I bought a plot in March 2019 and paid a stamp fee of approximately Rs 3 lakh. I paid Rs 27,000 in taxes in 2018-19. Can it be shown that stamp duty and registration fees provide income tax under section 80c? Is it possible to correct prepared tax returns and recover the money?
Amit Maheshwari, AKM Global Partner responds The stamp duty and registration charges paid to purchase a residential property eligible for the Section 80c deduction. However, the maximum deduction that can be claimed is 1.5 lakh, including all investments and other expenses allowed in the section. In addition, the 2018-2019 income tax return can generally be reviewed until March 31, 2020. Due to Covid's recent situation, it is now possible to review the ITR for the period 2018-19 until June 30, 2020. Therefore, you can request your ITR review to claim the previous discount.
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