I invest regularly in mutual funds. I had earned more than Rs 10 lakh as dividend from MFs in the last financial year. Do I need to pay tax on dividend exceeding Rs 10 lakh? — Sanju R Mankani

Dividend received from the companies in excess of Rs 10 lakh, is chargeable to tax at 10% under Section 115BBDA. This provision is applicable to dividends distributed by the companies and is not applicable to the income distribution by the mutual fund. As you have earned income more than Rs 10 lakh by way of distribution of income by the mutual fund you will not be liable to pay any tax under Section 115BBDA.

I retired from service on September 30, 2017. In the wake of the increase in tax-free gratuity limit to Rs 20 lakh by the labour ministry, will I be able to claim refund of tax deducted on my gratuity as per old limit of Rs 10 lakh? — P Yashwant

As per Section 10(10)(ii) of the Income Tax Act 1961, gratuity received under the Payment of Gratuity Act, 1972 is exempt in the hands of employees to the extent of the limit prescribed. The maximum limit amount of gratuity under the Payment of Gratuity Act, 1972 has been enhanced from Rs 10 lakh to Rs 20 lakh vide notification dated March 29, 2018. It has been clarified that enhanced ceiling of gratuity has been implemented from prospective date only i.e. March 29, 2018. It means provision regarding enhanced limit will be effective for employees becoming eligible on or after this date. I understand that you have received gratuity under the Payment of Gratuity Act 1972 and will be eligible for exemption under Section 10(10)(ii). However, since you have retired on September 30, 2017, you shall not be eligible for enhanced limit of Rs 20 lakh and exemption limit will be restricted to old limit of Rs 10 lakh.

If the market value of a property is Rs 35 lakh, is it possible to show a valuation of Rs 30 lakh in the sale deed? Will I have to pay gift tax on Rs 5 lakh? — Zaman Hussain

Gift tax in India is abolished since October 1, 1988, therefore you will not be required to pay any gift tax. However, as per Section 50C of the Income Tax Act, 1961, in case the agreement value is lower than the stamp duty valuation, the law presumes that the seller has received the sale consideration equal to the stamp duty valuation and the capital gains is computed accordingly. As per the amended provisions of Section 50C the margin of 5% is permitted between the sale consideration as per per the agreement and the stamp duty valuation. In your case the market value is assumed to be stamp duty valuation. If you show the sale consideration at Rs 30 lakh and the stamp duty valuation is Rs 35 lakh, then the income tax department will treat Rs 35 lakh as the sale consideration, because the stamp duty valuation is more than 5% of the sale consideration disclosed in the sale agreement.