Your questions: Income tax – Declare interest on postal savings account, PPF, MIS in ITR

By Chirag Nangia

Do I have to report the interest on the Post Office Savings Account, PPF and Monthly Income Plan (MIS) in the ITR? If so, under which heading and which form of RTI?
—Amitesh Kumar
A taxpayer is required to disclose income from all sources when filing an ITR, even if a deduction / exemption is available with respect to such income. You must therefore declare the interest of the savings account, the PPF and the MIS in the RTI. Interest income from the post office savings account and MIS is supposed to be reported in the “Schedule OS”, while interest from the PPF (being exempt) is to be reported as “other exempt income” in the Annex EI of the corresponding ITR form. These times are the same in all RTIs.

RTI 1 can be deposited if your total income is up to Rs 50 lakh and only includes income from wages, real estate, other sources (interest, etc.) and farm income up to Rs 5,000. If you also have income under ‘capital gains’ you will need to report your income details in RTI 2. Alternatively, if you are earning income from a business / profession, the disclosure will need to be made in RTI 3. Section 80TTA allows an individual to claim the deduction of interest earned on savings accounts held with a bank, cooperative society or post office, up to Rs 10 000. In the case of the elderly, this limit is increased to Rs 50,000 in accordance with section 80TTB. These deductions can be claimed when filing the RTI.

l I have paid 2 lakh per year for 10 years for a retirement plan where I can convert 1/3 which is tax free and the balance needs to be invested in a monthly pension. The value of the fund is 33 lakh. Is the commuted part of the corpus (`11 lakh) tax exempt or is 1/3 of the premium paid (` 6.66 lakh) tax exempt?
-A Ramanujam
The commuted value of the pension received by government employees is fully exempt. However, the commuted value of the pension received by any other employee would be exempt as follows:
a) cases where the employee receives a bonus – commuted value of 1/3 of the pension to which the employee is normally entitled to receive
b) in any other case – The commuted value of 1/2 of the pension to which the employee is normally entitled.
Therefore, if you receive a gratuity, 1/3 of the corpus will be exempt from tax.

The writer is director, Nangia Andersen India. Send your questions to [email protected]