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Mahesh Padmanabhan

Tax Expert 

76 Answers | 3 Followers

Mahesh Padmanabhan has specialised in payroll, personal and corporate taxation for more than two and a half decades, enabling him to provide practical, realistic and correct advice to his clients. He is a member of The Institute of Chartered Accountants of India and has a degree in cost accounting from the Institute of Cost Accountants of India. He is also a qualified information systems auditor. ... more

Answered on Feb 19, 2023

Asked by Anonymous - Feb 15, 2023
I have often read that debt funds are more tax efficient that FDs. However they always illustrate this with an example of people in 30% tax bracket. I would like to know the implications for a senior citizen whose taxable income is below the basic exemption limit after availing the 80C and 80 TTB deductions of 1.5 and 0.5 lakhs respectively. Is debt fund still advisable for such person? Also would like to know what are the tax implications for STCG if the debt fund is redeemed before 3 years. Will the tax liability be nil in this case or will it still be 15% .
Ans: Hi
The income from debt funds could be in either of the 2 forms, viz., dividend or capital gains. In case of dividend, the amount is added to your regular income and taxed based on the applicable slab rate i.e. if you do not have taxable income then you do not pay any tax on the said dividend.

Capital gain again is segregated into long term (holding period exceeding 36 months) and short term (less than 36 months).

Short term capital gain is taxable in the same manner as dividend and taxed based on your slab rate, which means if you do not have any taxable income then you do not pay any tax else it would depend on the slab rate.

Long term capital gain (which would be worked out after indexation) would be taxed at a flat rate of 20% regardless of your slab rate. Yes, would be eligible to a marginal relief in case you do not have other (regular slab rate) income i.e. you may pay something lesser than 20%.

These are all dynamic number related workings so I could only give you just generic conceptual knowledge and not specific amounts

Answered on Feb 14, 2023

I have a query pertaining to treatment of the amount for Income Tax purposes. We have an ancestral land in our village. A portion of the said land has been acquired by Government for a new highway. Currently the land is in the name of my father (~68 years old), a pensioner. He is likely to receive compensation of around 75 lakhs. He intends to use around 25 lakhs for construction of go-down/ shops for commercial use at village while the balance amount he intends to transfer equally to both his sons (myself & my younger brother). How does my father declare the amount in his Income Tax Return and what sort of tax he needs to pay on the total amount received. What will be the tax liability for us brothers on the amount received from him. Whether all three of us (my father & we two brothers) are free to spend the amount as deemed fit OR are we required to invest it in a particular way only. What happens if the amount is transferred to both his Daughter In Laws (non tax payer). Any other suggestion
Ans: Hi Rajan

As the owner of the land is your father, the taxability would apply to him alone and not to you or your brother.

The query would need further clarity in terms of the following aspects:

Whether this was an agricultural land?
What is the distance of the land from the nearest municipality jurisdiction?
What is the population of the place where the land is located?

In case this is an urban non-agricultural land then you may need to get the valuation report for the land as on April 1, 2001 from an Income Tax approved valuer. This would become your basic cost reference on which you would need to apply indexation. An example is stated below for easy understanding.

Suppose the valuation report brings out a value of Rs. 20 Lakhs as on April 1, 2001

Current Cost Inflation Index (CII) is 331 and base year (2001) index is 100

So indexed cost of acquisition would be Rs. 20 Lakhs x 331 / 100, which is Rs. 66.20 Lakhs

So capital gain would be Rs. 75 Lakhs - Rs. 66.20 Lakhs = Rs. 8.80 Lakhs on which your father would need to pay 20+% of tax.

As this is a regular asset, in case he wants to pay NIL tax then he would need to reinvest the full sale consideration in some eligible asset such as residential house or capital gains bonds (go-downs / shops are not eligible assets).

If he reinvests in eligible asset partially then he would get exemption only proportionately. Taking the same example:

Suppose he reinvests Rs. 50 Lakhs in capital gain bond (say NHAI or REC) then the eligible proportionate exemption would be as follows:

Rs. 50 Lakhs / Rs. 75 Lakhs x Rs. 8.80 Lakhs = Rs. 5.87 Lakhs

He would need to pay the 20+% tax on Rs. 2.93 Lakhs. He would be eligible to marginal relief provisions if his pension income is not substantial. Also, he may end up with Nil tax if his total income is below Rs. 5 Lakhs

Answered on Feb 04, 2023

Hello Sunil ji, I am kedar & age 61, asking a question regarding the taxation on the amount of inheritance to my wife. After death my father in law (sasur ji) few years back, My mother in law (my sasu ma) had taken a decision regarding the agricultural land in their small town, which was purchased by the grandfather of my wife (father of my father in law) is develped and made it in the NA plots as per town planning scheme. these plots are now ready to sale. My sasu ma want to disribute the amont sold of these real estate plots., to her three married daughters including my wife. sir, here please guid us, regarding the amount recieved to my wife through her mother's house, is liable for any tax like capital gain or it will be treated as gift tax free amonut from mother's house as a stri-dhan (स्त्री-धन) and treated a tax free inheritance amont from her parants. kindly guide. thanks.
Ans: Hi Kedarji
Based on your question, apparently on property records, your mother-in-law is the owner of the land. I do not wish to get into the legal heirship aspect of the land post your father-in-law's demise and hence i would restrict my answer within the perspective of your query.

As your MIL is the legal owner and she is the person selling the land, she will be the person liable to tax for the capital gain arising on sale of the NA land.

The distribution of the net sale proceeds to the 3 daughters could be treated as gift backed up with the relevant paper work such as executing the gift deed etc., to ensure that there is no further taxability to the 3 daughters


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