Govt considering tax relief on compensation for blast victims

New Delhi, Aug 1 (UNI) The government is actively considering a proposal to waive off tax on the compensation amount received by the Mumbai blast victims, Finance Minister P Chidambaram informed the Rajya Sabha today.

The Minister gave this assurance when it was pointed out by a member during the question hour that compensation received by the families of the Mumbai blast from the Central Government and state government were being taxed ''even though it was not a income generated by an individual.'' He said that he had already received a representation in this regard and the government was actively considering waiving off the tax on the compensation money. The compensation paid by railways is not taxed as it was insurance money.

Regarding the demand for reducing the age for claiming relief for income tax under the senior citizens scheme from current 65 years for men and 60 year for women to 60 and 55 respectively, the minister said that he would consider it. He also gave a similar assurance on the demand for decreasing the lock-in period for money to be deposited to get higher rate of interest of nine per cent for senior citizens.

About interest paid to senior citizens by banks and post offices on investment made by them being made taxable income, he said that senior citizens have been given a higher exemption threshhold of Rs 1,85,000 and would be taxed only if income is more than this.

Moreover, they have also been provided higher interest rate of nine per cent instead of usual seven percent. However, the interest would be made taxable, he said.

Tax deducted at source (TDS) is liable to be deducted by the person who pays the interest on deposits, unless the depositor furnishes a declaration in Form 15 H or in Form 15G if the tax on his estimated income in the financial year is nill, he pointed out.

However, in case the TDS has been deducted by banks despite the furnishing Form 15H or 15G, this would be rectified in the next quarter, Mr Chidambaram said.

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