Does the senior citizens savings scheme qualify for section 80C benefits?
I am a retired government employee. In June 2017, I deposited Rs 15 lakh in the post office senior citizens saving scheme. Does it qualify under section 80C tax benefits? If so, do I need to save Rs 1.5 lakh as equity-linked savings scheme (ELSS) this year to save tax?
An amount deposited under the Senior Citizens Savings Scheme Rules, 2004 is eligible for deduction under section 80C of Income Tax Act, 1961. You will be eligible to claim deduction of Rs 1.5 lakh under section 80C. You need not invest any further amount to claim the deduction.
In exchange for 200 shares of Cairn (purchased five years ago), Vedanta gave me 200 shares and 800 preference shares worth Rs 8,000. Do I have to pay tax when these preference shares are redeemed? Is the dividend on preference shares taxed?
I understand that in the Scheme of Amalgamation against your shareholding of 200 equity shares in Cairn, you were allotted 200 equity shares of Vedanta and also 800 preference shares of Vedanta. At the time of this allotment, there was no transfer of shares of Cairn in view of the specific provision of Section 47(vii) of the Income Tax Act,
Resulting into no liability for payment of capital gains tax. As per provisions of Section 49(2), in respect of the 200 equity shares and 800 preference shares of Vedanta, the cost of acquisition will be the cost of acquisition of 200 equity shares of Cairn. In the Scheme of Merger the fair value of equity shares of Vedanta must have been determined.
The total fair value of the shares of Vedanta will be the fair value of 200 equity shares of Vedanta and 800 preference shares of Vedanta. You will be required to proportionately allocate the cost of acquisition of 200 equity shares of Cairn amongst the cost of 200 equity shares and 800 preference shares of Vedanta based on the respective fair value of such shares. The dividend income from preference shares will be exempt under Section 10(34).