Advance tax provisions are not applicable to senior citizens
March, 27th 2014
As you are a senior citizen, you would be required to pay tax if your taxable income exceeds the basic income exemption threshold, i.e. Rs.2.5 lakh during the financial year (FY) 2013-14.
As your interest income on FD (income from other sources) is likely to exceed the aforesaid basic income exemption limit, the tax should be computed as per the progressive tax rates for FY2013-14. According to the rates, if your taxable income is: * Up to Rs.2.5 lakh, there is no tax liability
* Between Rs.2.5 lakh and Rs.5 lakh, you will be taxed at a rate of 10%
* Between Rs.5 lakh and Rs.10 lakh, you will be taxed at a rate of 20%
* If it is more than Rs.10 lakh, you will be taxed at a rate of 30%
Further, education cess of 3% will have to be added on the basic tax liability. The current tax rates will continue for FY2014-15. Further, you can avail deduction under section 80C with respect to specified investments such as having an FD of five years or more with a scheduled bank, investment in Public Provident Fund and so on. The deduction from the taxable income shall be restricted to an overall limit of Rs.1 lakh per fiscal. Taxes, if any, deducted by the bank on interest on FD as per the tax provisions should be reduced while determining the tax liability.
Since you are a senior citizen and you do not earn income from business and profession, advance tax provisions are also not applicable. Accordingly, you can pay the entire net tax on interest income after the fiscal ends on 31 March. The same will be termed as “self assessment tax” and same should be paid before filing your personal tax return for FY2013-14.
At present, my home loan outstanding is Rs. 2.82 lakh and if I take loan for renovation of the same house (currently rented out), will I get tax benefit on both loans? —Rajendra Chavan
Yes, you can avail tax benefit with respect to loan availed for renovation of house property in addition to the home loan availed at the time of construction or purchase of the property. The tax benefit in respect of the said loan shall be restricted to the interest portion. As the property is rented, the entire interest on loan availed for renovation can be claimed as deduction while computing income from house property. But, you cannot claim the deduction under section 80C against the principal repayment in respect of loan availed for renovation. The repayment of principal amount of loan availed for purchase or construction of house property qualifies for 80C deduction with an overall cap of Rs.1 lakh per fiscal.