Ask Harsh Roongta anything on Personal Finance: Senior citizens can submit form 15H only if tax on total income is nil

I am a senior citizen. My gross income exceeds Rs 5 lakh (salary and interest from fixed deposit). After deducting under 80 C, the amount comes down to below Rs 5 lakh. I pay advance tax (September, December, March) and I have been submitting form 15H to the bank for the last 2 years. The reason for this is that excess tax is deducted by the banks (Banks do not consider the investment of Rs 1.5 lakh) and previous tax refund orders are still pending since 2007-08 by the income tax department. Is it valid according to the income tax rules and regulations? Please confirm.

–Cyril Pereira

As a senior citizen, you are eligible to submit form 15H if the tax on your estimated total income for that year is nil. Since you are paying advance tax, it is clear that the tax on your total income is not nil. Hence, you are not eligible to submit form 15H. Incidentally, senior citizens are not required to pay advance tax. But that does not mean you can submit incorrect form 15H. You also have the option to get a certificate for deduction of tax at a lower rate but that is a time-consuming and administratively inconvenient procedure. An alternative suggestion is to file your tax returns electronically. Lately, small value refunds for returns filed electronically are received pretty quickly.

I have been investing in PPF in the name of my wife since last twenty years, which will be maturing on 31st March 2017. The total maturity proceeds will be over Rs 28,00,000. I intend to invest maturity proceeds in fixed income securities like senior citizen scheme and fixed deposits with RBI, etc. Will the interest earned on such deposits attract clubbing provision? If yes, to what extent? I am aware that interest on interest is not required to be clubbed with my income since I pay income tax and my wife is dependent on me without any independent income.

– Surendra P Singh

Any taxable income derived from the originally gifted amount will continue to be clubbed in your hands. It is not clear how much of the Rs 28,00,000 maturity value is the amount contributed by you and how much is on account of interest. Assuming that Rs 8 lakh was the original amount contributed by you and the balance amount is PPF interest, when you reinvest the maturity proceeds the interest on this amount (Rs 8,00,000) will be clubbed in your hands. If you wish to save tax on this amount, you can invest this in tax-free bonds.

Harsh Roongta is a chartered accountant and Sebi-registered investment expert. Send your queries – be it on mutual funds, tax, loans or savings – to personalfinance@dnaindia.net or tweet them to @AskHarshdna'