Your questions on PF answered!

ave a tax query? Maybe we can help.

Drop us a line and our experts, Relax With Tax, will do the needful.

I worked in two companies for the financial year 2004-05.

Subsequently, I withdrew my provident fund amount from my first company's PF Trust and invested it in PPF, infrastructure bonds, an LIC scheme and a pension fund. All these investments are declared in the Form 16 of my present company.

Is this alright?

Also, the Form 16 of my first company will reflect the deduction in PF (which I subsequently withdrew). Can I claim deduction under Section 88 for the same?

- Amit

As far as investment under Section 88 is concerned, the source of the amount being invested is not relevant.

It does not matter if you have withdrawn the amount from your previous employer's PF trust and invested it in PPF.

But you have not mentioned details about the period of service in your previous employment to determine the taxability of the PF withdrawn.

If you have worked for at least five years continuously and the PF had been continued for this period, it would not be taxed at the time of withdrawal.

In your case, at the time of withdrawal, you would have got a calculation sheet from the PF trust that would detail, among other things, the tax deducted (if any) from the PF withdrawn.

I am a salaried employee. I have not claimed my LTA so far in the current block of 2002-2005.

I intend claiming it some time in the coming financial year (2005-06).

What will be the effect of the New Fringe Benefit Tax on LTA?

- Ashish Maheshwari

First, fringe benefit tax has not yet been implemented. So unless we see the amended version (if it is amended), and it is enacted by the Parliament, nothing can be said about it.

Second, all perquisites are being taxed as earlier. LTC is a perquisite, not a fringe benefit. Hence, its tax implication remains the same as earlier.

If an NRI friend gifts me money across wire transfer, does the amount come under my taxable income?

- Ranga Makanaboyina

Gifts are covered in the Income Tax Act for the purpose of taxation.

Gifts received from people other than a relative, are exempt from tax only to the extent of Rs 25,000. But gifts received on certain occasions (like marriage), over Rs 25,000, is exempt from tax.

So the amount gifted by your friend would be taxed in your hands if it exceeds Rs 25,000.

My previous company has given me a salary certificate that doesn't show my investments under Section 80CCC (Rs 10,000), and the amount paid to Mediclaim.

Hence, my new company has not considered these in my tax computation. Can I show these in my IT returns?

- Pavan Kumar

Yes you can claim both benefits when you file your returns.

Got a question for Relax With Tax? Please write to us!

Note: Questions may be edited for brevity. Due to the tremendous response, all queries will not be answered.

Illustration: Dominic Xavier