Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
The Economic Times

Does pension from EPFO qualify for standard deduction?

I am senior citizen. My taxable income is a little over Rs 5 lakh. Does the EPFO pension qualify for standard deduction? Does the rebate of Rs 12,500 make senior citizens’ taxable income tax-free up to Rs 5,12,500?

Amit Maheshwari, Partner, Ashok Maheshwary and Associates says, "As per Section 87A of the I-T Act, you can claim tax rebate of Rs 12,500, if you are a resident individual and your total income does not exceed Rs 5 lakh. If the total income exceeds Rs 5 lakh, one is not eligible to claim this rebate. Further, the pension received from EPFO is taxable under the head salary and it will qualify for standard deduction. However, the maximum standard deduction would be Rs 50,000 or the amount of pension, whichever is less."

I bought a flat for Rs 70 lakh in 2006 and sold it recently for Rs 2 crore. What is my capital gain on which I will have to pay LTCG tax? If I decide to deposit the amount in a CGAS scheme, do I have to deposit the entire sale proceeds or only the amount after indexation?

Archit Gupta, CEO, ClearTax says, "To calculate the gains from the sale, the purchase cost or acquisition cost will be indexed by applying the cost inflation index (CII). It is done to adjust the rate of inflation over the years of holding the capital asset. The capital gains will be calculated by multiplying the cost of acquisition with the CII of the year of sale and dividing it by the CII of the year of purchase. The resulting indexed cost of acquisition will be subtracted from the sale value. The net figure is the amount of taxable capital gains. You can deposit the capital gains of Rs 34,18,033 in the CGAS scheme and claim the amount as an exemption from the capital gains and no tax is required to be paid. The amount has to be deposited before the date of filing income tax return for 2019-20. However, if the amount is not invested within the stipulated time, the deposit will be taxed as capital gains of the year in which the specified period lapses and taxed accordingly."
Stay on top of business news with The Economic Times App. Download it Now!