Your Taxes

Kindly advice whether interest of up to ₹50,000 earned from the Senior Citizens Savings Scheme (SCSS) will be allowed as deduction under Section 80TTB from April 1, 2018? Also, is savings bank interest included under the Section 80TTB deduction?

Uday Kajaria

Section 80TTB of the Income Tax Act, 1961, allows deduction of up to ₹50,000 from the gross total income of senior citizens aged above 60 years, on the following income: interest on bank deposits (savings or fixed); interest on deposits held in co-operative societies engaged in the business of banking, including co-operative land mortgage banks and co-operative land development banks; and interest on post-office deposits.

SCSS is a deposit account with specified banks and network post offices.

Interest from SCSS would qualify for deduction under Section 80TTB of the I-T Act.

Section 80TTB deduction applies for savings-bank interest as well.

Please note that a person claiming exemption under Section 80TTB cannot additionally claim an exemption of ₹10,000 under Section 80TTA of the I-T Act.

I intend to gift my wife ₹10 lakh on my superannuation from my retirement benefits. She is a housewife with agricultural income. What will be the tax implications for us?

Ramesh P

Superannuation payment on retirement from a recognised superannuation fund is exempt from tax, as per Section 10(13) of the Income Tax Act.

Generally, transfer made without adequate consideration is taxable in the hands of the recipient in accordance with Section 56 of the I-T Act. However, gifts made to specified relatives are specifically exempt.

A gift made by a husband to his wife is covered within the exemption. Therefore, the gift of ₹10 lakh to your wife will not have any tax implication for her.

Irrespective of her other income, any income earned by your spouse from investing the gifted money, will be clubbed in your hands and will be included in your income in accordance with Section 64 of the Act.

Therefore, you will be required to pay tax on such income during the years in which income from such investment arises.

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in

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