Suspense on DSOPF and PPF Accounts taxation is off now

All of you must’ve heard yesterday’s news about clarity on the taxation of yearly subscription to DSOPF and PPF accounts. In both of these modes of investing, contributions up to Rs 5 Lakhs per year (Rs 41,666/- per month) is tax exempt from 1st April 2021.

What does it mean for you? Watch out for our detailed analysis tomorrow in the same space.

Reinvest your capital gains in 54EC bonds and save taxes

If you have earned long-term capital gains (LTCG) from land or building or both and would like tax exemption on these gains, you have few options. Either you can pay the tax due, reinvest the LTCG amount to buy a residential property within stipulated time frames or you can invest the LTCG in capital gain bonds qualified under section 54EC of the Income Tax Act. You can invest up to Rs 50 lakh per financial year in 54EC bonds.

So, if you have had more than Rs 50 lakh of LTCGs and you plan to invest it in the 54 EC bonds to claim the tax exemption, you should invest Rs 50 lakh before the end of current financial year and then you can again invest up to Rs 50 lakh in next financial year. However, the complete reinvestment has to be done within six months from the sale of the property. Currently, the rate of interest on these bonds is 5% per annum and a lock-in of 5 years. The interest is paid annually and is fully taxable in hands of the taxpayer.

Deduction against Preventive Health Check-up expenses

Health has become a major concern for all of us, more so since last one year during the pandemic. One of the ideal ways to take care of your health is to get regular medical check-ups, maybe once or twice a year. This will help you to diagnose any ailment or illness at the initial stage and you can accordingly take the required measures to control it.

Moreover, expenses to the extent of Rs 5,000 for preventive health check-up (Medical check-ups) can be claimed as tax deductions under section 80D of the Income Tax Act. Remember, this deduction will be within the overall limit of Rs 25,000 (for non-senior citizens) or Rs 50,000 (for senior citizens) under section 80D.

So, if you have not got your health check-up done so far, please get it done before 31st March to claim the deduction benefit, if you need it.

Don’t forget to link your Pan card and Aadhaar card before 31 March

The extended deadline to link your Permanent Account Number (PAN) and Aadhaar number is ending on 31st March. If you have not yet linked your PAN to your Aadhaar card, do it now, else your PAN card will be declared “inoperative” after the deadline ends.

Remember, if your PAN is not linked to your Aadhaar, then from 1st April you will not be able to do many financial transactions, especially those where you need to quote PAN mandatorily.

For instance; you will not be able to file your income tax return (ITR) using your PAN card in case your PAN card is classified as “inoperative”. Besides that, you also need to link your PAN and AADHAAR to operate your existing bank accounts or open a new one, purchase shares or mutual funds, and carrying out transactions above Rs 50,000.

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