Widow Housewife Liability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2010 Hi,
I have a question regarding taxpaying. I have lost my father last October 2009.He was a retired person and he filed his return (thought he had no tax to pay).

Now with his sudden demise,my mother has received a lumpsum amount of Rs 1.5 lac from LIC Varistha Bima Yojana & an amount of Rs 1.09 lac from Employees Provident Fund & now she receives a regular income of Rs 545 as monthly pension from EPF.Other than this she receives some minimal amt as dividend from shares which are in the name of - [a]my father only [b] my mother & my father both.

My Mother is a housewife.And now with my father's demise will she be required to pay tax?Will the 2 lumpsum amt that she has received from LIC & EPF be taxable? Is there any manner by which I can save tax ( as she is financial not strong)?Please suggest some investment option for her keeping in mind that she has a studying son(for which they may need maney soon) & a married daughter(ie me). I have heard some investment option-

[a] Monthly Income Scheme - is MIS exempt from tax?

[b] FD - but it is not tax exempt?

I need to know about investment that will not have a long duration & also be tax exempt.

I will be highly grateful if someone reverts me back with suggession as I am totally confused.

Thanking you
Anjana

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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15 March 2010 Monthly pension is taxable, whereas lumpsum amounts received is exempt.

Further as per the present income tax law dividend is exempt from tax.

You can tell your mother to deposit in SBI- MODS which is a fixed deposit having liquidity. Ie you can withdraw any part at any time which is linked to your savings account and you contiune to enjoy interest for the undrawn amount.

Eventhough the iterest is taxable she will be within the limit because of small corpus.