REPLY :  

Transportation allowance is given to the employees for commuting between residence and office. Though it is not an official expense and have the characteristics of a perquisite yet it is treated as non taxable in the hands of an employee to the extent of Rs.800 per month. It is not necessary to prove that the amount received as transportation allowance is actually spent on the transportation.

REPLY :  

Gift is without consideration. The gifting of shares to HUF is without consideration and hence the question of assigning some value to the shares does not arise. In such a case, for the purpose of accounting, the value in the hands of HUF shall be the market value of the shares as on the date of gift. However, if HUF wants to sell or transfer these shares, the cost of acquisition for the purpose of calculating the capital gain shall be taken as cost for which you have acquired the shares. Book value will again have no relevance.

As far as second part of your question is concerned, presently there is no gift tax on the gifts made. However any income arising out of the gifted asset would be clubbed with your income and shall be taxed in your hand. However, it is not out of place to mention that the income from shares in the shape of dividend income is exempt from tax under section 10(33) of the Income Tax Act.

REPLY :  

Ordinarily Key Man Insurance is not done by Insurance Company if the Key Man and his family hold more than 50% of shares of the company and/or Key Man holds more than 25% of the shares. Further you have not indicated the consideration at the time of assignment. Assuming that your company is able to get such a Key Man Insurance Policy, then at the time of assignment of policy in the favour of CMD the consideration equivalent to the surrender value shall be treated as the business income of the company in that year. However, if the company has assigned the policy without consideration the surrender value shall be treated as perquisite in the hands of the Key Man. As a tax- planning tool your company can take Jeevan Shree policy as Keyman Insurance Policy, under which the amount is received in installments at the time of maturity. That way you can defer the tax liability.

REPLY :  

The liability to deduct TDS on the interest arises if interest payment exceeds Rs.5000 p.a. However, there is no liability to deduct TDS if interest payment is made to -

(a) Banking Company (b) Public Financial Institute

In my opinion, the auto finance company referred seems to be a NBFC and TDS on interest is required to be deducted if the interest exceeds Rs.5000 per annum.

REPLY :  

As per Section 10(1) in computing the total income of any person for any year income from agriculture or agricultural income is not included. Section 2(45) defines total amount of income referred to in Section 5, computed in the manner laid down in this Act.

Paragraph A of Part 1 of the First Schedule to the Finance Act, 2001 says that a surcharge at the rate of twelve percent of such income tax shall be levied where the total exceeds Rs.60,000 but does not exceed Rs.1,50,000.

A combined reading of the First Schedule to the Finance Act and the definition of total income implies that in your case the surcharge shall be levied only at a rate of 12%.

REPLY :  

Firstly, your salary after claiming standard deduction will be Rs. 90000/-, as from assessment year 2002-03, for salary up to Rs. 150000/-, standard deduction of one- third of the salary or Rs. 30000/-, whichever is less is available.

Secondly, your friend is correct to some extent as there is one more condition which needs to be fulfilled to claim rebate of 30%. And that is, income charged under the head Salaries should be atleast 90% of the gross total income and I am afraid that in your case it is not so. So you’ll be not entitled to a rebate of 30%.

REPLY :  

Undoubtedly agricultural income is tax exempt but such income is added to other taxable income in order to find out the tax rate applicable.

Surcharge on the other hand is levied on the basis of Total Income which is calculated without taking into account the agricultural income. The rate at which the surcharge is levied is as follows:

a) 12 % where the total income exceeds Rs.60,000 but does not exceed Rs.1,50,000.
b) 17 % where the total income exceeds Rs. 1,50,000.

REPLY :  

Retrospective changes made in the method of valuation of perquisites are applicable from the 1st day of April 2001. However an option has been given to the employee to compute the value of all perquisites made available to him for the period beginning on 1st day of April, 2001 and ending on 30th day of September, 2001 in accordance with the Rules as they stood prior to this amendment.

Interest-free or concessional loans provided to an employee or to any member of his household after 1.4.2001 have been brought under the tax net. Perquisite value would be 10% per annum in respect of loans for house and conveyance and 13% per annum for other loans. Calculation is to be made on maximum outstanding monthly balance as reduced by the interest actually paid by you. Loans availed prior to 1.4.2001 are not affected.

Loans for medical treatment in respect of specified diseases and petty loans not exceeding in the aggregate Rs.20,000 during the year are kept out of the purview of tax.

Credit cards: Unless, the credit cards are used wholly and exclusively for official purposes for which complete details such as date and nature of the expenditure are maintained by the employer, the payment of expenses including membership fees and annual fees on the credit cards made by the employer shall be taken as perquisite in your hands. You would also be required to provide a certificate countersigned by your supervisor stating that the expenditure was incurred wholly and exclusively for the performance of official duty. In case some persons are entertained for business purposes a list of the same has to be maintained.

Any amount paid by you towards your personal expenses would however be reduced from the perquisite value so arrived.

Club Membership paid by the company shall be taxed as perquisite in your hands. Payments made by the employer for expenses incurred wholly and exclusively for official purposes for which complete details are not kept in respect of date, nature and purpose of expenditure would also to be treated as perquisite.

Laptops and computers are kept out of the list of movable assets normally provided to the employees resulting into taxable personal benefits. For other assets, the value of benefit would be calculated at 10% per annum of its actual cost or the amount of rent or charges paid or payable by the employer.

REPLY :  

The question of claiming rebate under section 88 arises only if one has tax liability in the current year. Income chargeable to tax is more relevant than to match the investment with inflow of funds. It is also immaterial whether the income chargeable to tax belongs to the current year or any preceding years.

Maturity proceeds of NSC gives rise to funds that are available for investment along with other funds generated out of taxable income. Hence reinvestment of maturity proceeds would be eligible for rebate if you have other taxable income.

REPLY :  

I am afraid, the Income Tax Act does not permit carry forward of loss under one head (other than capital loss) without off setting it against eligible incomes in other heads. If there is an income in one head and loss in another, you have no option but to set off loss against such income. Otherwise the computation would be wholly artificial and will not reflect the correct income. Please note that income of minor included in your income is your income for tax purposes and would be used to set off the loss suffered by you.

REPLY :  

Any sum paid to keep in effect or to keep in force the insurance is eligible for rebate. Late fees is paid to keep the policy in force. In my view, you can claim rebate on the whole of the amount paid to the LIC.

REPLY :  

Any person having income below the taxable limit is not required to file income tax return unless hit by one-by-six-criteria. Subscriber to a telephone residing in the prescribed area has to file return irrespective of the fact whether the telephone is used by him or not. It does not matter who foots the bill. Therefore you should file your return in the prescribed form.

REPLY :  

In case you want your tax liability to remain same as before, you’ll have to provide a certificate that the expenses were incurred while performing official duties. Additionally, your employer has to maintain proper records of the journeys undertaken by you for official purposes stating date of journey, destination, mileage and the amount of expenditure incurred. In absence of such records and the certificate, the whole of the amount paid to you by your employer i.e. Rs.10,000 as reduced by Rs.1200 (Rs.1800 in case chauffeur is also provided) shall be taxable in your hands. In case the car being used by you is of higher engine capacity (1.6 lit. or more )the allowable deduction would be Rs.1600 and Rs.2200 respectively.

REPLY :  

New perquisite valuation norms allows option to the employees to compute the value of all perquisites availed upto 30th September 2001 in accordance with the rules as they stood prior to this amendment. Since free tickets were not taxable as per old provisions, you may exercise the option provided it is beneficial in totality.

Whether retirees are at liable for tax on perquisites is itself a debatable point. Perquisites are normally provided while in employment and they cease to exist once the employment ceases. Moreover Section 17(2) pertaining to perquisites does not cover provision of perquisites to ex-employees, as is the case of arrears of salary, pensions, compensations in connection with termination, etc received from the former employer. A clarification from the department on taxability of perks enjoyed by ex-employees would help.

REPLY :  

Wherever the credit card is used for both personal as well as official purposes the annual fees or membership fee would be taxable as perquisites in your hands. Those having multiple credit cards may use only one of the cards for dual purposes to minimise tax incidence.

REPLY :   

Any educational facility or training provided by the employer to the employee directly or indirectly is not taxable perquisite since such training normally enhances the overall efficiency of the employee and benefits the employer. However in cases where the nature of course or the training is such that it does not have any co-relation with performance of the duties, the fees so paid by the employer would be taxable in full. ~

REPLY :  

If services are provided in India, the income is deemed to accrue and arise in India and taxable in India in case of non residents also. However provisions of Double taxation avoidance agreement between India and US override income tax law. Accordingly, in case the stay in India does not exceed 183 days in the relevant taxable year and the remuneration is actually paid by foreign employer and not born by permanent establishment or Indian joint venture, the tax liability would not arise in India. You may seek advance ruling to doubly ensure the tax liability.

REPLY :  

There is misconception that only owners of house property are required to comply with provisions of one-by-six-scheme. Please note that one-by-six-scheme is applicable to all occupiers of an immovable property including tenants or those occupying the property otherwise, where the house property having specified floor area is situated in specified cities/areas. Thus you should file the return being an occupier.

REPLY :  

Deduction of salary for un-expired period of notice appears to be wrong. The employer is entitled to either utilise your services during the notice period or may relieve you before expiry of notice period by paying salary for unexpired notice period.

Industrial Employment (Standing Orders) Act, 1946 prescribes that every industrial establishment wherein hundred or more workers are employed has to formally define conditions of employment relating to termination of employment and notice thereof etc known as ‘Standing Orders’. Otherwise Model Standing Orders as set out by Central Government apply wherein only one-month notice is prescribed. You should check out the Standing Orders of your concern before taking any further action.

REPLY :  

Under the Income-tax Act, generally, the loss incurred by a person can be set off or carried forward only by such person himself. Such benefit cannot be availed of by successor who has come to own the business by way of purchase etc. However in case of succession by way of inheritance, losses incurred by the deceased can be offset against the future income of the business carried forward by the legal heirs.