I receive conveyance allowance from my employer as I am disabled. From this financial year, is conveyance allowance (only for disabled) received by the disabled taxable?

Uttam Sawant

As per the provisions of Section 10(14) Income-tax Act, 1961, read with Rule 2BB of Income-tax Rules, 1962 (‘the Rules’), transport allowance granted to a disabled employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty is exempt from tax to the extent of ₹3,200 per month. An employee who is blind or deaf and dumb or orthoaedically handicapped with disability of lower extremities is considered a disabled employee. The amendment in the Finance Act, 2018 (effective for FY 2018-19) was withdrawal of transport allowance of ₹1,600 per month for other employees (other than a disabled employee). Hence, if your disability falls under the aforesaid categories, you may continue to claim exemption of ₹3,200 per month.

Can I invest in Section 80C securities or under other sections of the Income-Tax Act to claim deductions from family pension? Please indicate the deductions (standard or other) that I can claim on family pension.

SC Saxena

As per provisions of Section 57 of Income-tax Act, ‘family pension’ means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death. The pension is taxable under the ‘income from other sources’ in the hands of the recipient. From the amount received as family pension, a deduction shall be allowed to the extent of one-third of the pension received or ₹15,000, whichever is lower.

Standard deduction under Section 16 has been introduced by Finance Act, 2018 for salary income. Family pension is taxable under the head ‘income from other sources’. Hence, standard deduction is not applicable in case of family pension. However, you shall be eligible to invest under Section 80C/chapter VI-A of the Act and claim such eligible deductions.

I have a PPF account with SBI. It was extended for five years in 2015. The account is due in 2020. Can I extend this account for a further period of five years or should I close it? Kindly clarify.

Ramakrishna

A PPF account matures after 15 years from the end of the year when the account was opened. A customer can extend the tenure for one or more blocks of five years each beyond the maturity period by submitting Form H within a year from the maturity date.

You can choose to extend your account for a further period of five years (within one year from the date of maturity) or close it upon maturity.

The author is a practising chartered accountant

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