Get a PAN to avoid TDS on bank interest

I have a fixed deposit with State Bank of India. The bank wants to deduct TDS at 20 per cent since I do not have a PAN. Can I escape the deduction if I split my investments in such a way that my income from each such investment is below tax deductible limit? If this is not feasible, what other option do I have? If I have a PAN, do I have to compulsorily file income-tax returns?
Sharan Teja, Via e-mail

According to Section 206 AA(1), income-tax returns notwithstanding anything contained in an other provisions of this Act, provides for tax deduction at 20 per cent, if the deductor has not furnished his Permanent Account Number (PAN) to the deductee, while sub-section 2 and 3 would render a declaration without the number invalid so that the deductor shall be obliged to deduct tax at source on “any sum or income or amount on which tax is deductible”.
I would suggest that you apply for PAN immediately so that you stay away from all the hassles. Otherwise, you may need to spread your investments with various banks, which again would become inconvenient and tedious. You need to file your income-tax returns only if it exceeds the threshold limit specified in the Income-Tax Act.

I am an 82-year-old retired employee. My income comprises of pension, interest on bank fixed deposits and dividend from mutual funds. I am filing my tax return in ITR-1. Please advise if I can continue filing the same form, if I invest about 10-15 per cent of my income in shares which may result in income or loss.
Kishen Narayan, Via e-mail

ITR-1 is applicable for assessees having salary and interest income. In case your income also comprises of capital gains — profit or loss on shares — you need to file your return in ITR 2.

My mother’s PPF account was opened in March 1995. She expired in June 2003. I and my sister are the nominees. We intimated the bank about the death by enclosing copy of death certificate. As per PPF rules, 15 years is prescribed for closure but payment can be received in death cases when claim is submitted. However we did not submit a claim for payment because we found it benefitting us.
Please clarify if the account can be allowed to active beyond 15 years?

Shiva Kumar, Via e-mail

As per PPF rules, no time limit is specified for claiming the amount by the nominees/legal heirs on the death of the subscriber. However, after the 15 years period is completed, a requisition for extending the duration by another five years needs to be made by the subscriber. You will be eligible to receive interest for the completed calendar month upto the submission of the claim, which is however subject to the condition that no interest will be paid after March 31, 2011 — one year duration from the date of closure of the PPF account. Further, interest is not payable on any contribution made in the account after the death of subscriber. Therefore, it is suggested that you may put up your claim immediately.

Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabadbased accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com [1]