Personal Finance
The tax treatment of such funds is equity and hence any withdrawals after 1 year is completely tax free
Updated : Jul 14, 2017, 07:25 AM IST
Based on the data given, you will be treated as a resident in India for tax purposes for the current financial year (FY) 2017-18. The issue with being treated as a resident in India is that the salary and gratuity received by you in UAE can be taxable in India unless you have been a non resident in 9 of the 10 financial years beginning 2007-08 till FY2016-17. If you have not been a non resident as above then you could look at delaying your return to India to November 3, 2017 so as to remain a non resident in India for FY2017-18.
Regarding your question about investments in India for your lump sum amount, your corpus is Rs 40 lakh. You will need to use it to create an income for around 28 years (assuming life till 85 years less current age of 57 years) which is quite a long period of time. You will need to protect yourself against inflation during this period so your investments will need to be a mix of fixed income investments (safety of principle but low yield) with hybrid funds that have a combination of around 25-35% equity and balance is debt. Just to give you a rough idea your corpus will be able to get a monthly income of around Rs 12,000 per month adjusted for inflation at 8% if the entire corpus also returns around 8% post tax. If your need for monthly expenses is higher you will either need a higher corpus amount or you will need to earn at a higher rate than inflation.
You could deposit 50% of the amount in bank fixed deposit or short-term debt fund/income fund or a combination of these and the balance 50% can be invested in what are called equity savings fund which has around 25-35% equity component, around 30-40% arbitrage component and the balance is debt. The tax treatment of such funds is equity and hence any withdrawals after 1 year is completely tax free. This advice will need to be tailored for your specific needs and risk profile. Please consult an independent investment adviser before making any investment decisions.
You have not mentioned your age. If you are 80 years or above then no tax is payable by you on the facts as mentioned by you. If your age is less than 80 years but greater than 60 years then the situation is as follows.
Income from salary will be Rs 54,8314; annual value of self-occupied house is treated as Nil and no deduction is available for society maintainence charges or (KDMC taxes paid in respect of self occupied house). Your deduction under section 80C will be Rs 99,634 as mentioned by you; net taxable income will thus be Rs 4,48,680. Tax is payable on the income that exceeds Rs 3,00,000 @ 10% - i.e. 10% of Rs 1,48,680 = 14,868.
You will be eligible for tax e=rebate under section 87A of Rs 5,000. Net tax payable will thus be Rs 9,868. Surcharge is payable at 3% on that which is therefore Rs 296. Total tax payable works out to Rs 10,164.The above is a simplistic answer making several assumptions. Please seek professional advice as you may be eligible for other deductions especially in relation to medical expenditure for self or spouse or specified relatives or some other item of expenditure.