Setting off Business Loss Against Salary

1. Setting off business loss against salary
I am employed with a company. I also had a part-time business—running a cyber cafe. Can I offset business loss incurred while running the cyber cafe against my salary income?
Megha Datta, New Delhi

Yes, the loss that you incurred in your business can be offset against your salary income. However, if the loss is not wholly set off against your salary income that year, that much of the loss, which is not set off, can be carried forward to be set off only against business income.

2. Retirement Savings
I have retired recently from a government job and I have received retirement benefits to the tune of Rs 8.5 lakh. Can you please advise me where I could invest this money to get the maximum advantage, in terms of returns and taxation.
Om Prakash, New Delhi

Since you have retired recently, it means that you are still not a senior citizen as far as income tax rules are concerned. Therefore, to maximise your returns you should select those schemes, which are tax-free. When you will be 65 years old, you will start getting a tax rebate of Rs 20,000 under Section 88B of the IT Act. There are many options for investment, which you might also be aware of, such as Monthly Income Plans of Post-Office and UTI, RBI Relief Bonds, National Savings Certificates, etc. Depending on your regular need of income, you can choose from these schemes. However, I would like to mention the Post-Office Deposit Scheme for Retiring Employees.

Under this scheme, a retired government employee can invest by way of deposits with a post-office. The minimum amount one can deposit is Rs 1,000, and the maximum amount one can deposit is not more than total retiring benefits. The rate of return is 7 per cent a year, which is payable half-yearly on June 30 and December 31.

The entire interest income is tax-free. There is a lock-in period of three years. You can withdraw the entire amount after three years. However, if you need your capital earlier, then there is a provision that allows premature withdrawal after one year. In such a situation, there is a loss of interest, which will be paid at the rate of 4 per cent a year.