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Are PPF, mediclaim a ought to in new tax regime?

3 min read
The new tax regime does not pose any restriction on making deposits in PPF account or paying medical insurance. (iStockphoto)

I’m planning to go for the model new tax regime whereas submitting my earnings tax return (ITR) for the analysis yr (AY) 2024-25. Should I proceed to deposit ₹1.5 lakh yearly in public provident fund (PPF) and in my mediclaim? Is it very important to level out these two objects in my ITR beneath the model new regime?

—Name withheld on request

The Income-tax Act, 1961, presents an option to file the tax return using the default new tax regime (related for AY 2024-25) beneath half 115BAC of the Act or selecting the outdated tax regime. These tax regimes differ vis-à-vis the tax expenses and the availability of positive deductions/exemptions whereas calculating your taxable earnings.

The new tax regime would not pose any restriction on making deposits in PPF account or paying medical insurance coverage protection. It solely stipulates that beneath the model new tax regime, deduction beneath Section 80C (which covers funding in PPF account) and half 80D (which covers medical insurance coverage protection premium price) of the Act, cannot be claimed. Considering that the talked about deductions mustn’t allowed beneath the model new tax regime, the similar are moreover correspondingly not required to be reported whereas submitting the tax return. However disclosures inside the asset schedules, as related, will proceed even beneath the model new tax regime.

Please bear in mind that these deductions proceed to be accessible if a taxpayer chooses to go for outdated tax regime, matter to prescribed limits.

My father-in-law must reward my partner roughly ₹30 lakh, which we intend to utilize to repay our housing mortgage. As the one borrower of the home mortgage, what’s essentially the most fitted technique to ensure there are no tax liabilities?

Can my father-in-law reward this amount on to my partner, allowing us to utilize it for mortgage compensation with out incurring any earnings tax? Alternatively, must we take into consideration together with my partner as a co-borrower to the mortgage sooner than paying it off? Or is it doable for my father-in-law to reward the money on to me?

—Name withheld on request

As per the provisions of half 56(2)(x) of the Income-tax Act, 1961, any sum of money or price of property obtained from ‘relative’ should not be regarded as taxable earnings inside the fingers of the recipient. The definition of ‘relative’ for this purpose covers ‘spouse, ‘any lineal ascendant or descendant of the spouse of the individual’ or ‘any lineal ascendant or descendant of the individual’.

Thus, a sum of money obtained by you as reward out of your father-in-law straight or out of your partner should not be taxable in your fingers. Similarly, any sum of money obtained by your partner from her father as a gift (and, in flip, gifted to you), shall not be regarded as a taxable receipt in her fingers.

Parizad Sirwalla is affiliate and head, world mobility firms, tax, KPMG in India.

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Updated: 28 May 2023, 10:28 PM IST