21 July 2010
Hello, I would like to know the income tax treatment for withdrawal from Post office MIS. My father and mother had joint MIS accounts. However after my father passed away, the Post office asked us to withdraw half of the amount as the limit for single account holder had to be fulfilled. Is the amount withdrawn taxable? If yes, is it under Capital Gain Tax and how is the computation to be done as the cost is the amount invested which is being returned back and the interest is subject to tax on yearly basis. Requets for an early reply. Thanks.
21 July 2010
This is not a capital gain. Your amount is returned to you at par with what is invested. The interest portion only is taxed as IFOS. Your investment is from taxed proceeds already and you have not availed Chapter VI-A deduction on this amount. Therefore no capital gains. However, if Post office has issued a bonus in addition to the investment, that is taxed as interest.
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