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Tax Queries: Taxpayers do not need to pay demand below Rs 100

Dilip Lakhani, senior chartered accountant, answers queries from our readers on income tax and other levies.

I recently received an intimation under Section 143(1) wherein the tax department demanded Rs 60 as ‘net amount payable’. The letter mentions ‘Demand Identification No’, but does not figure in the ‘Respond to outstanding tax demand’ on the I-T department web portal. What does this mean? Do I really need to pay this? If yes, how do I pay it online? —Nikhil Anand

The demand as per intimation under Section 143(1) is of Rs 60. The Government of India has issued a press note dated January 5, 2012, wherein it is clarified that demand of less than Rs 100 will not be collected from the assessee. In view of this fact, even though there is a demand of Rs 60 payable as per intimation under Section 143(1) the same is not reflected as the liability on I-T department web portal. You will not be required to pay the demand.

I have surrendered my HDFC Unitlinked Pension Policy (without insurance cover sum assured) on December 28, 2017, before maturity date March 22, 2018, and have received Rs 2,36,472 as surrender value. The policy was purchased on March 22, 2008, with 10-year maturity. The policy had an option of withdrawing 1/3 of maturity benefit as a tax-free cash lump sum and had the option to convert the rest to annuity or you had option to utilise the entire proceeds to purchase annuity/pension. I have paid total 10 yearly instalments of Rs 12,000 each of premium starting from March 22, 2008, and the last one paid on April 6, 2017. I am an income-tax payer and fall under 20% slab. Please clarify: (1) Is the amount Rs 2,36,472 taxable? If yes, what will be the tax amount? (2) Can I claim Rs 12,000 premium paid on April 6, 2017, being the last instalment u/s 80C for year 2017-2018? —Baburao C Basarge

I understand HDFC Unitlinked Pension (ULPP) is unit linked-deferred pension plan. Premium paid on Unitlinked pension policy qualifies for deduction u/s 80C of the I-T Act. Policy holder has the option to receive 1/3rd of the corpus tax-free under section 10(10D) of the I-T Act as tax-free amount. The balance 2/3 remaining may be used to purchase annuity. Whenever you will receive annuity amount, it will be treated as taxable income and the applicable rate of tax will apply. However, in case the said ULPP is surrendered before the date of maturity, the surrender value will be taxable in the year of receipt. Hence, in your case Surrender value of Rs 2,36,472 on the above policy will be included as you taxable income. The premium paid on April 6, 2017 will be eligible for deduction u/s 80C of the I-T Act while computing total income for AY 2018-19.

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