F.A.Q on Indian Income Tax Laws F.A.Q on Indian Income Tax Laws The blog is regarding Indian Income Tax Laws.The format is FAQ.Readers can also ask question Articles
Do Registration & Stamp Duty Payments Save Tax?
2008-01-13 18:30:00 I am a salaried employee, recently bought House and got registered, I incurred 1.70 lacs Registration fees & Stamp Duty . my question is is Registration Fees & Stamp Duty exempt from tax. If yes under which section and max exemption amount . Ventakatesh, BangloreDefinitely yes. The deduction u/s 80C also covers the registration and stamp duty payments. The maximum deduction u/s 80C is Rs 1 lakh which includes deduction on registration and stamp duty also. Clause xviii of section 80C(2) provides for deduction of expense on construction or purchase of house. The sub-clause (d) of the clause (xviii) provides for deduction of registration and stamp duty. Here is the excerpt of the said sub-clausexviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head Income from house property (or which would, if it had not been used for the assessees own residence, have been chargeable to tax under that head),... More About: Save , Stration
Why Should I Pay Tax On 13 Months' Salary When I Earned For 12 Months Only?
2008-01-13 15:43:00 I am working in SSSIHMS Prasanthigram.Today I received a notice from our Director asking for my income tax deduction for 13 months from March2007 to March2008 since they are going to pay me March2008 salary on 31.03.2008.which they were not practicing in previous years.Only because they credit my pay to my account 24 hours ahead of completion of the financial year I have to pay excess income tax of one month's salary though actually I earn for 12 months ,receive for 12 months and should pay my tax for 12 months also.Please advise me what steps should I take to avert extra month's tax for which I am not due. Name Withheld, PrasanthigramThe salary is taxable either on due basis or receipt basis. This is clear from section 15 of the I T Act which is as under15. The following income shall be chargeable to income-tax under the head Salaries(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;(b) any salary paid or allowed to ... More About: Salary , Months , Mont , N 13
Can Non Resident Having Taxable Income Afford Not To File The Return Of Inc
2008-01-08 15:32:00 I m a NRI, and do not have any source of income in India. therefore i m not filling my returns.however there is a possibility of some income in India in near future whereby the income earned is with TDS.Can you pls advice me if it is required to file tax returns ? or the income earned in India can be directly deposited in NRO account after the deduction of tax at source.Narender Sharma, Gurgaon The answer is yes, but this facility is only for Non Resident Indian , provided certain conditions are fulfilled.Chapter XII-A in the I T Act provides special provisions relating to certain incomes of non-residents. Under this chapter, there is express provision u/s 115 G of the I T Act as under: 115G. It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of... More About: File , Income , Return , The Return
Where Can I Get The Prescribed Form For Disability Certificate For 80DD or
2008-01-04 10:50:00 Three sections under I T Act prescribes for deduction on account of medical reasons. Section 80DD,80DDB and 80U . Two important points need mention 1. Although these sections still state that such certificate should be attached with the return of income, the return itself from Asst Yr 2007-08 has gone under a total change and no documents are to be enclosed with the return. This must be unintended confusion by law makers. In due course , there may be amendment to these provisions .However, in any case I feel you will have to get these ailments certified and then claim the deduction. The certificates should be preserved with you for future requirements, if ever department wants to see it. 2. The Rule 11A of IT Rule under Sub-rule 2 prescribes " (2) For the purposes of sub-section (4) of section 80DD and sub-section (2) of section 80U, the assessee shall furnish along with the return of income, a copy of the certificate issued by the medical authority,? (i) in Form No. 10-IA-, where... More About: Disability , Forms , Sabi , Cert
Does Definition OF Parent in 80DDB Mean Father-in Law or Mother -in -Law?
2008-01-03 19:12:00 MY QUESTION IS WHETHER THE DEFINITION "DEPENDENT PARENT" INCLUDE "FATHER IN LAW OR MOTHER IN LAW".ONE OF MY LADY ASSESSEE WHOSE HUSBAND IS A GOVERNMENT SERVICE HOLDER, SHE IS DOING TRADING BUSINESS, SHE HAD EXPENDED DURING 01/04/2006 TO 31/03/2007 FOR MEDICAL TREATMENT OF HER "FATHER-IN-LAW" WHICH DISEASE IS COMING UNDER 80DDB. ADVISE ME WHETHER SHE HAS THE ELIGIBILITY TO GET DEDUCTION U/S 80DDB. AGAIN SHE ALSO MADE SOME EXPENDITURE FOR HER OWN FATHER AND MOTHER DURING THAT PERIOD, BUT SHE HAS HER OWN EMPLOYED BROTHER. IN THIS CASE WHETHER SHE WILL BE ELIGIBLE TO GET DEDUCTION U/S80 DDB.RANJAN KUMAR MISHRA, BalasoreThe meaning of dependent was explained in this posting. Explanation to section 80DDB is clear on the meaning of dependent . It says"(b) dependant means (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;" As per Oxford dictionary, the word parent meansnoun 1 a father or mother. 2 an animal or plant from... More About: Mother , Definition , Father , Parent , Fath
Good News! Investment In Sr.Citizen Savings & 5 Year PO Time Deposit Eligib
2008-01-03 07:47:00 A news You Can UseRead the following press release given on income tax department's site regarding the eligibility of two new savings scheme as far as 80C deduction is concerned.PRESS RELEASESection 80C of the Income-tax Act provides for a deduction of up to Rs. One lakh to an individual or a Hindu undivided family (HUF) for:-(i) making investments in certain savings instruments; or(ii) incurring expenditure on tuition fee and repayment of housing loan.2. With a view to encourage small savings, the Government has taken a policy decision to include the investments made in the following two deposit instruments within the ambit of Section 80C:-(i) Five Year Post Office Time Deposit Account; and(ii) Senior Citizens Savings Scheme.3. Therefore, the investment by an individual or a Hindu undivided family (HUF) in these two instruments during the previous year 2007-08 (relevant to assessment year 2008-09), and subsequent years, shall be eligible for deduction under section 80C of the Inc... More About: News , Investment , Good News , Good
Can Employer Adjust Excess Tax Deduction From One Employee With Liability
2008-01-03 07:35:00 Excess Tax have been deducted at source (TDS) from my salary & remitted to the IT Dept by the company in which I am working due to the mistake of the finance dept calculations.Kindly let me know how the excess Income tax deducted & remitted can be adjusted in the Income tax (TDS of other staff) which is being remitted by the company every month.B.V.Dharma Prakash, BangloreI am afraid this is not allowable. I T Act under section 192(3) is provides that an employer can increase or decrease of tax deduction in case of an employee during the year for the purpose of adjusting any excess or deficiency . The wording of section 192(3) are as under :3) The person responsible for making the payment referred to in sub-section (1) or sub-section (1A)] or sub-section (2) or sub-section (2A) or sub-section (2B)] may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of ... More About: Employee , Employer , Adjust
Is TDS Required on Service Charges Related To Rented Property?
2007-12-28 17:08:00 Partnership Firm is receiving rent from tenants. We are raising Service tax and Cess on gross rent w.e.f 1.6.07 as per Notification given by Service TAx Dept.Our tenants deducting TDS on Net amount payable to us (Gross Rent and Service Tax). Now we are told to tenants TDS should not be deducted on Service TAx due to it is not our income and we are liable to pay to Gorn.dept.Our question iswhether TDS can deducted(Companies) on only Gross rent / Net payable(inclusive of Service Tax) ?What is the TDS rate on Maintenance charges received from tenants (Companies) as per lease deed agreement apart from rent? Sunil Kumar, HyderabadFirst of all TDS is required to be deducted on gross amount and it has to include service tax if any. For more on this issue , read this. As far as , service charges related to a property is concerned, the best way to understand the CBDT,s clarification in this regard vide circular no 715 dated 8/8/1995 which is given as under:Question 24 : Whether in a case of... More About: Property , Related , Pert , Rope
Can An NRI Invest In Firm?
2007-12-24 06:01:00 Can an NRI become a partner in a partnership firm in India and invest in that firm? V S A PRASAD, Hyderabad Any thing related to foreign investments or exchange , RBI is the authority for framing rules. The Master Circular on Foreign Invest ment in India date 2/7/2007 issued by RBI contains following provision regarding investment in firms . The facility is divided on repatriation basis and non repatriation basis .The excerpts of the circular which is very clear is given below Investments with repatriation benefits A non-resident Indian or a person of Indian origin resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided i) Amount is invested by inward remittance or out of NRE / FCNR / NRO account maintained with AD bank. ii) The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business (i.e. dealing in land and immovable property with a view t...
What Is The Consequance Of Failure To Deliver 15H Declaration?
2007-12-24 04:22:00 What is the consequence if a Deducting authority (for TDS purposes) receives Forms 15G/H, but fails to forward the same to the Jurisdictional CIT or CCIT. Rule 29-C only provides to forward the declarations before the 7th of the next month, but is silent about the consequences if the person fails to forward the same.Ravi Shankar S. , Jaypur The provision regarding lower deduction of tax is given in section 197A under which the scheme of Forms 15G/H are prescribed. The tax deducting authority are liable to any penalty equal to the TDS on the amount if they fail to deliver or delay in delivery of form 15 G or 15 H as per section 272(2) of the I T Act. which is given as under : 272(2) If any person fails ............................. (f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in section 197A; or ............. he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: ............Provided th... More About: Declaration , Failure , The Con , Clar
CBDT Issues Circular On FBT on ESOP With 25 FAQs .
2007-12-22 05:33:00 The Central Board Of Direct Taxes has released a circular Circular No 9/2007 dated 20/9/2007 which contains 25 frequently asked questions on ESOP. The excerpt of the circular is given below for the benefit of readers Frequently Asked Questions A number of issues have been raised by trade and industry at different fora after the presentation of the Finance Bill, 2007, after its enactment and also after the notification of Rule 40C. The questions and answers in the following section seek to clarify these issues: 1. Whether a foreign company is liable to pay FBT on shares allotted or transferred to the employees of its Indian subsidiary? Answer In terms of the provisions of Chapter XII-H of the Act, an employer, being a company, is liable to pay FBT in respect of the fringe benefits provided or deemed to have been provided by it to its employees, directly or indirectly, during the previous year. Since the shares are allotted or transferred to employees of the Indian subsid... More About: Issues , Issue
Should You Deduct Tax At Source On Interest Paid To Bank?
2007-12-20 02:41:00 Taken Vechicle Loan from ICICI Bank , HDFC Bank , Kotak Bank & OD on Axis Bank , Monthly we are paying Principal & Interest .Whether we have to Deducted TDS for the Interest paid to the above bank. Siva Sankar , Pennadam Interest paid on loan is covered u/s 194A . Subsection 3 of section 194A provides cases where the provision of TDS u/s 194A do not apply. Clause (iii) of sub section 194(3) provides that tax is not required to be deducted in case interest is paid or credited to banking or financial institutions.The said provision u/s 194A(3)(ii) is as under :(3) The provisions of sub-section (1) shall not apply (iii) to such income credited or paid to- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life I... More About: Source , Paid , Eres
Will You Get Exemption U/s 54 On Sale Of House ,If You Own More Than One Ho
2007-12-11 05:16:00 The assesse owns three residential properties. out of which he sells one residential property and invests the profit on sale of property in another residential property within two months of date of sale. Is the assessee liable to pay the long term capital gain? Jamuna ,Chennai Yes, you will get the exemption u/s 54 t the extent the capital gains is utilised. The provision u/s 54 is as under 54. (1)Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset , being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after tha... More About: House , Sale
Is Compensation Awarded By Court Taxable?
2007-12-09 05:19:00 Like to know if compensation amount decreed by the court on account of very delayed release of benefits by employer attract income tax. It is only an amount not exchanged against any value. Also, what must be deducted as TDS? The facts of the case was that the person was paid his pension with all arrears by his employer after a long delay of some 7 years. After receiving his pension along with arrears,he filed a civil suit for compensating him for the unjust enrichment received by his employer, a public sector undertaking during the delay period of 7 years. His suit is decreed in toto and he is also awarded interest from date of filing the suit till date of payment. ( It may be noted that the amount he is to receive is not related to pension/arrears. Those amounts he already has received. Now the income in question is a compensation for unjust enrichment received by the employer during the long and unjustified delay).Now the question is whether this amount decreed by court is taxabl... More About: Salary , Compensation , Court
How To Choose The Right Provision -194C or 194I ?
2007-12-09 04:14:00 I recently attended seminar on FBT & TDS . In this seminar Lakhotiaji told that vehicle hiring also comes under the purview of tds _rent and 10% tds shall be deducted from the party .as per his advice we are deducting TDS on vehicle hiring @ 10% + 3% Cess. Now the party is objecting . They are claiming that only 2.06% TDS should be deducted. Shikha ,Noida The confusion regarding the deduction of tax u/s 194 C and 194 I has arisen on account of insertion of new definition of rent u/s 194I .The expanded meaning of Rent now includes even plant and machinery's rental.Thus ,work involving plant and machinery for which TDS was being done u/s 194C now demands that consideration for section 194I should also be given.Deductor get confused regarding the selection of correct provision.Because the rate of TDS also very different, wrong application alos hurts deductees.Simplest example of such confusion is regarding rental of car which was previously being subject to TDS u/s 194 C ... More About: Choose , Provision
When Is TDS Required On Payment To Non Resident?
2007-12-07 03:11:00 I am an exporter from India. I have a agent in Malaysia & need to pay him his commission for the exports done through him. How can I pay him & what are the tax barriers. Manish Shah, MumbaiYou have not elaborated the nature of job ,your agent in Malaysia has done for you. The nature of job is very important factor. It is to be examined for the purpose of ascertaining whether the income of the non resident whom a payment is required to be made , falls under section 9 which has been amended by Finance Act 2007.Recent amendment in section 9 . Section 9 pertains to the income deemed to arise or accrues in India. A non resident?s income which is deemed to accrue or arise in India is taxable in India .But one of the important factor for such taxability in case of non resident was to see if the non resident had business connection in India or any fixed base or any residence in India. Recently , Finance Act 2007 inserted an Explanation to section 9 of the I T Act which has aboli... More About: Payment , Resident
Why Business or Capital Loss Can Not Be Carried Forward?
2007-11-29 18:17:00 I have been called for scrutiny of AY 2006-07 returns by ITO Hyderabad. I had set off ST capital gains (shares)of the previous year 2005-06 with that of ST capital loss of AY 2002-03. ITO has raised an objection that since the returns of the AY 2002-03 were submitted late after the due date (i.e submitted on 05.08.02) of 31.07.02, I am not eligible for carry forward of the ST loss amount. Is that true that late submission of the returns by 5 days will carry the penalty of cancellation of carry forward amount? if so, what is the solution to get the eligibility to carry forward. J V Mohan You are fortunate ! How? For that you will have to read till last.The A.O's reasoning is correct as far as law is concerned. The A.O has raised an objection on the basis of provision u/s 139(3) which says that if someone wants to carry forward business loss or capital loss , he may file the return within due date . The section 139(3) is is under (3) If any person who has sustained a loss in an... More About: Business , Loss , Capital , Forward , Sine
I Am An Actor. What Should Be TDS Rate In My Case?
2007-11-29 14:19:00 I am an actor and my income is over 10 lakh per annum- earlier we were made payments with 5.6% tds deducted. now it has become double- 10.3% however I am told if your billing with one particular company is over 10 lakh then we are liable to pay 11.3% tds- is that true- also there is one particular co which insists on deducting tds of 11.3% even though my earning from them in one yr is only 5 lac-AditaActing is a professional service liable to TDS u/s 194J of the I T Act . Section 194J prescribes rate of tax at 10 % of the amount paid or credited for professional or technical services. The said provision is as under :194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of (a) fees for professional services, or (b) fees for technical services, or (c) royalty, or (d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the t... More About: Case , Rate , Actor
Is Money Receipt From NRI Friend Taxable In India?
2007-11-23 17:01:00 One of my friend is working in some other country and used to send some money from there in my salaried account in India on which he is already paying tax there.So will it going to be taxable for me as well. SarikaIf you receive any sum of money exceeding Rs 25,000 without any consideration after 1/4/2004 but before 1/4/2006 [After 1/4/2006, if the aggregate sum of money received exceeds Rs 50,000, such sum will be taxable] whether from resident or non-resident friends , is certainly taxable in your hands under section 56(2)(v) of the I T Act. Some of the important point regarding section 56(2)(v) are :The sums of money received at the time your marriage is non taxable even if received from no-relatives including friends.From 1/4/2006, if you receive gifts from many persons or friends without any occasion and aggregate of such gifts exceeds Rs 50,000 the whole of gift shall be taxable. For example , you received Rs 10,000 from eight friends on 1/9/2006, then for FY 2006-07, you w... More About: Money , Friend , Gift
Can Indians Invest Abroad Without RBI Approval?
2007-11-20 05:26:00 One of the American company is offering me some shares under ESOP. This company is not listed in India. It is listed New York Stock Exchange.My worry is how this transaction will took Place? If I want to sale these shares how I will Sale It. ? Please reply at the earliest.Parag You have nothing to worry about. RBI had already allowed purchase of shares of foreign companies listed abroad under ESOP without any kind of restriction. The remittance of foreign exchange required for purchase of these shares by employees of the company which was issuing shares under ESOP was without any limit.But the real good news for all Indian residents has come recently when the RBI under Liberalized Remittance Scheme allowed all resident Indians to invest abroad in whatever things like except prohibited items upto US Dollar 2,00,000 (increased from 1lakh Dollar to 2 Lakh Dollar recently ) in one financial year. So now an Indian resident can approach its bank for remitting US Dollar 2,00,000 ... More About: Foreign Exchange , Invest , Broad
Who Are the Relatives For Whom Educational Loan Can Get You Tax Relief?
2007-11-19 16:00:00 I think during budget of financial year 2007-08, there was new Tax benefit entered for - If Individual takes education loan for children of relatives, he can get tax benefit on interest of Loan taken. To be specific about my query, I want to take Education Loan for my sisters children ( Nephew ). As they need it and I can afford the same. The idea is to help those who are in need.Will it be possible to get TAX benefit as they are not my children. Nikesh Jani An individual was eligible for deduction of interest on educational loan only for his higher studies till FY 2006-07 . So, a father who was taking educational loan for his children, could not claim deduction u/s 80E . Budget 2007 brought the pleasant change in section 80E to insert the term 'relative' . The provision u/s 80E is as under; 80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him i... More About: Educational , Relatives , Relief
What Can Be Consequences For Filing Late Return?
2007-11-18 03:42:00 What are the penalties for filling late I.T. Return i.e. after 31 Oct. 07 in case of HUF firm with turnover of 4 crores. Raj Sharma Actually , a person who has no tax liability as on the last day of an assessment year can file return up to 31st March of the assessment year concerned without any kind of penalty proceedings. As in your case, there is no penalty upto 31/3/2008 for filing return for Asst Yr 2007-08.But late filing of return may create following problems depending upon situation The interest u/s 234A @ 1 may be imposed if there remains tax outstanding at the time of processing u/s 143(1). The provision us/ 234A is as under "234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a mon... More About: Late , Consequences , Penalty
What Is Taxation Rule of Contribution to PF?
2007-11-17 08:48:00 Employee Contribution to Provident Fund and Employer's Contribution to PF..Are both included in Income while preparing Form-16 and in return as well and deduction under 80c is available for both contribution or for employee's only ....Anshul SinghalThe basic rules of income tax regarding provident fund are as under:The contribution to provident fund by employee is eligible for deduction u/s 80C. Employers contribution is not taken for deduction purpose.All payments by provident fund is tax free in case of Central/state provident fund.The contribution by employers in excess of 12 % recognised PF is taxable salary of the employee. The interest paid by recognised provident fund in excess of 9.5 % is also taxable income of the employee.In case an employee is member of unrecognised PF and when it is recognised by Commissioner of Income Tax , the accumulated balance is transferred to reocgnised PF. That amount which has been transferred from unrecognised to recognised is also taxable i... More About: Taxation , Salary , Rule
How Can ESOP Shares Become Taxable Perquisite ?
2007-11-14 17:33:00 1. I am in employment with a company since Jan 2002. 2. the company included me in an ESOP scheme where in shares were to vest in installments between 2004 and 2008 in Septmber each year 3. In March 2007 early vesting of ESOPs was undertaken and ESOPs due in Sep 07 and Sep 08 were fully vested and exercised in March itself.4. In lieu of an early exercise the Employees were required to sign a voluntary undertaking to pay a sum of Rs 14 lacs calculated with reference to ESOPS vesting in Sep 08 in case the employee exited the company prior to Sep 08, which I signed. 5. On Oct 5 2007 I resigned with due notice of 2 months. The question is 1. will the payment of Rs 14 lacs to my Employer by me be treated as Salary income for TDS computation. This payment is not being reimbursed to me by anyone so this question. Are there any case laws supporting the argument that it should be treated as Salary income. Alternately can I claim this as salary income and claim refund later if the... More About: Shares , Ares
Are Capital Gains On Sale Of ESOP Shares Listed Abroad Exempt?
2007-11-14 16:42:00 I am an Indian resident, and had some ESOPs which I had exercised and paid in January 2004. These were paid in USD and money on sale will also come in USD, the company went public in October 2006. What is the capital gains tax rate that will apply to me on sale of shares (listed on NYSE), if I sell after October 2007 or before October 2007? Virender Puri Shares whether quoted or unquoted becomes long term asset after being held for more than one year. You exercised your option in January 2004, therefore after January 2005, shares became long term asset in your hand. Its sale will give rise to long term gains. Since you are resident and the shares are listed outside India , the tax rate applied in this case will be 20% as per section 112 of the I T Act . The NIL tax rate for long term gains is for shares which are sold through stock exchanges registered in India.However, you can claim indexation on the cost of the share. For more on indexation , read here. For computation of capi... More About: Sale , Foreign Exchange , Capital , Capital Gains
Is Consultancy Fee To A Non Resident Canadian Liable To TDS?
2007-11-13 14:57:00 I am a Indian Passport Holder but residing in Canada since last 6 years as Permanent Resident . I am being offered a consulting assignment in Delhi on rotational basis ( ie. one month in Delhi followed by one month leave ( unpaid) in Canada. Company is saying that they can pay me my fees in US $ & any service tax ( 12%) will be on their account.I am responsible for my personnel tax. I file my tax in Canada. Are they going to withheld some withholding tax as per Indian IT act. ( I will be staying less the 183 days in each Financial Year). What is the position of DT Treaty between India & Canada. Ramesh Sharma Section 5(2) of the Income Tax Act'61 provides the scope of total income in following words:(2) the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which(a) is received or is deemed to be received in India in such year by or on behalf of such person ; or(b) accrues or arises or is deemed to accrue o... More About: Canadian , Consultancy , Adia , Ulta
Can You Explain Dividend & Bonus Stripping ?
2007-11-10 11:34:00 Can you please explain the concept of tax planning by dividend stripping? G.V.Krishna Mohan The dividend stripping is nothing but getting tax free income in the form of dividend and creating capital loss at the same time.The total effect of such device on your income is handsome saving of tax .The dividend is tax free whereas the capital loss incurred on sale of shares or units is utilised for reducing the profit under short term capital gains or income under any other head Let us take an example. XYZ mutual fund advertises for dividend on a particular fund as follows : Amount of dividend : Rs 10 per unit Price of Unit : Rs 30 Record date : 1/7/2001 If you purchased 1,00,000 units by 1/7/2001, the mutual fund, you will get following on 2/7/2001Dividend from mutual fund company : Rs 10,00,000Payment made for acquiring units : Rs 30,00,000 Price of units on 2/7/2003 (ex dividend) : Rs 19.50Capital Loss on sale of units : (30 -19.50) x 1,00,000 = 11... More About: Bonus , Stripping
Should We Withhold Tax on Payment To NRI For Consultancy?
2007-11-07 06:29:00 We are a software company in INDIA .We need to appoint a consultant on commission basis in US .He is a NRI settled for last 20 years.He is facilitating orders from a US company .These orders are serviced by us at our office in NEW DELHI.Since he is doing his activities in US , NOT IN INDIA .We need to know if we have to deduct any withholding tax or any other tax while sending him commission .KULDIP KUMAR MEHTA Section 9 of the I T Act defines income which are deemed to accrue and arise in India. Subsection (vii) of section 9 is for technical services. The said subsection is as under : (vii) income by way of fees for technical services payable by (a) the Government ; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person who is a non-resident, where the fees are payable in... More About: Payment , Consultancy , Ulta
Is Retrenchment Compensation Awarded by Court Taxable?
2007-11-04 14:57:00 Do we need to deduct TDS from retrenchment compensation awarded by the labour court.Prasanta Kumar Sahu Retrenchment compensation is defined as "Profits in Lieu of Salary " u/s 17 of the I t Act .Hence ,it taxable under the head "salary' . However, retrenchment compensations is exempt u/s 10(10B ) of the I T Act up to Rs 5,00,000 [vide notification No 10969, dated 25-6-1999] if following conditions are fulfilled Compensation is received by a "workman". his retrenchment was as per Industrial Disputes Act 1947; or Any other Act or rules or any order or notification issued there under; or Any standing order; or any award,contract of service or otherwise So, there is no doubt that retrenchment compensation is taxable above the amount it is exempt. As you can see ,award by a court is also a way of getting "retrenchment compensation'. But even in that case , maximum exempt amount is Rs 5 lakh. Important point to check is : if the person who received the award from the court ... More About: Court
Return Filing Date Extended!
More articles from this author:2007-11-01 05:05:00 The CBDT has extended the due date of filing of return for Asst Yr 2007-08. The extension is effective for electronic filing as well as manual. Date of filing FBT return as well as date for obtaining tax audit report are extended too. Read the press releaseNo. 402/92/2006-MC (46 of 2007)Government of India/ Ministry of FinanceDepartment of RevenueCentral Board of Direct TaxesNew Delhi, the 31 st October 2007PRESS RELEASEThe Central Board of Direct taxes have extended the last date of filing of income tax /fringe benefit tax returns due by 31 st October 2007 as follows:-For electronic returns (companies, and firms requiring tax audit u/s 44AB) to 15 th November 2007; andFor paper returns (other than those required to file electronic returns) to 2 nd November 2007.It is further clarified that the dates for obtaining tax audit report under section 44AB of the Income Tax Act have also been extended accordingly. More About: Return , Extended 1, 2, 3, 4, 5, 6, 7 |
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