F.A.Q on Indian Income Tax Laws

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Windows Licence Fee Is Subject TO TDS !
2007-03-18 13:35:00
We have purchased windows 2003 license,i.e only documents,costing around 4Lakhs,and CDS worth 10,000.,and there is no installation,or service provided by them,my question is do we have to deduct TDS for this ? I am in a dilemma please reply and thank you in advance..... : vijai.isr@gmail.comYou have given little facts .However , with some presumption I am replying. In my opinion, the Section 194J is applicable after the amendment from 13/7/2006 by which Royalty has been included within the provision of section 194J . The amended section states 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, 46a[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 time of payment thereof in cash or by issue of a cheque or draft or by any...
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Deduction u/s 80D Not Allowable For Mediclaim on Parents of Wife
2007-03-17 12:52:00
I am taking one mediclaim policy in name of my Wife ( who is not filing) and her parents. Can I avail the tax benefit for this mediclaim?pradeepk@sgtus.comThe mediclaim deduction is allowable u/s 80D. Sub section 2 of Section 80D states the person on whom mediclaim policy allowable for deduction under I T Act.The excerpt of the relevant provision is as under:"(2) The sum referred to in sub-section (1) shall be the following, namely : (a) where the assessee is an individual, any sum paid to effect or to keep in force an insurance on the health of the assessee or on the health of the wife or husband, dependent parents or dependent children of the assessee;"In my opinion, law makers used the words assessee and then wife or husband and dependent parents, mean that only assessee's parents who may be either husband or wife , is allowable for mediclaim. As such, you may not get deduction for the amount spent on "parents of wife" Tags: Deduction, Income Tax
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Fastest Tax Computation For FY 2006-07 & FY 2007-08
2007-03-17 06:49:00
Presenting fastest Comp utation of tax liability in Fy 2006-07 and FY 2007-08 for Individuals.The input is to be given in Total income field after reducing deduction u/s 80C and other deductions.Capital Gains have been excluded from the computation keeping simplicity in mind and that computation of capital gains is easier . I will be publishing different types of computation of tax including Form 2D which will automatically compute tax in excel format.Please give feedback and any error you find.Tags: Tax Calculators
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How to Compute Turnover In Case Of Future & Options Trades?
2007-03-12 05:21:00
I am a working professional and apart from my salary I have some income in Future s and option transactions and shares. I need to know few this.Since Futures and options transactions are under business income. Can we set of gains and losses against income from salary?How is turnover in Futures and options transactions calculated?? If notional value is considered, even 5-10 transactions will exceed 40L turnover and we need go through tedious Tax audit process. What are documents that needs to be submitted while filing returns of income. Apart from Form 16, will a statement of account for futures and options transactions would be enough? santoshk.sahu@gmail.comAnswer to your first question is Negative. The loss from "Capital Gains " and "Business & professions" can not be set off with income from Salary.The meaning of turnover for in case of transactions in Futures and Options of shares is not defined under the I T Act.In case of derivative trading-Futures and Option- the difference ...
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Budget's Tax Proposals Made Simple!
2007-03-11 13:59:00
The budget , every year , is much hyped event and more so because the newspaper reading class are the one who keeps an eye on all the proposals made by Hon'ble F.M .Rest of the country just ignores even though all are effected by the changes made through budget proposals same way. The Finance Act 2007 proposes following changes which will bring cheers to some and agony to some. Here are the proposals from income tax angle:Tax Rates:Increase the limit by Rs 10,000. So exemptions for different classes are Tax free upto Rs 1,45,000 for Women Tax Free upto Rs 1,95,000 for Senior Citizen Tax free s 1,10,000 upto for rest of Individuals and HUF .Education Cess increased from 2% to 3%.Surcharge 10% if income exceeds Rs 10,00,000. SalaryExplanation inserted to diffuse the impact of the judicial ruling by which there must be a positive finding that there indeed was concession in rent granted to an employee. Now , such concession is being taxed by making the computatio...
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Non Issue of TDS Certificate Will Make Deductor Liable To Penalty
2007-03-11 09:06:00
Our client has deducted the TDS amount in the Fy yr 2005/06, So we have already taken the claim for the said deduction while filing or returns. But even after numerous calls to our client they are not giving us the TDS certificate, its almost a year now and its time for making the audit report. Please suggest what we can do in this circumstances. rajesh@matrixbay.comThere is clear provision under section 203 of the I T Act which compels the deductor to give a TDS certificate to the person whose case tax has been deducted.Section 203 of the I T Act .....203. (1)Every person deducting tax in accordance with the foregoing provisions of this Chapter shall, within such period as may be prescribed from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any dividend to a shareholder, furnish to the person to whose account such credit is given or to whom such payment is made or the cheque or warrant is issued, a ce...
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Taxi Rental Is Subject To TDS!
2007-03-10 17:28:00
My name is Hardeep Singh.My work is to give taxi to company on hire basis.I send the bill to companies.Some companies say it will cut tds 22% and some company cut 15%.Pl guide me: hardeeptravels371@yahoo.co.inThe hiring of taxi is now subject to TDS u/s 194 I . Under Section 194I , rate of tax for an individual is 15% .If you file your return in status of Individual status, rate of deduction shall be 15% .However, if the rent during the year does not exceed Rs 1,20,000,no TDS has to be done.Therefore, first see whether with each company you are getting rental above Rs 1,80,000 , if not request them not to deduct the tax.For your ready reference ,section 194I is given as under"194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other...
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Future Trading Is Business Activity!
2007-03-10 16:43:00
Is income from Future s trading is business income or capital gain. If business income whether i have to file tax audit report, if the gross turnover exceeds Rs.40 lacs? rangarajan_s1@....mail.comThe future trading has been classified as business activity from Asst yr 2006-07 by removing the trading in derivative segment from the definition of speculative transactions. Section 43(5) defines Speculation in following words"(5) speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips:"However , proviso (d) to this subsection , introduced from Asst Year 2006-07 stated "Provided that for the purposes of this clause (a) ..................; or (b) ........ or (c) ............. (d) an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the S...
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Deduction u/s 80C Allowed Even If Source Of investment Is Loan.
2007-03-10 16:14:00
I m a central Govt. Servant. I have recently bought a flat. I had taken Rs. 1,50,000 as interest-free loan from my brother to pay the stamp duty etc. while purchasing the flat. I want to know:1. whether the money taken from the brother impose any tax liabillity on me?2. If not, can I be given any income tax rebate on the said amount?Kindly answer my queries. praaanjal@yahoo.comNo, there is no income tax liaibility.Unlike old Section 88 under which rebates were allowed , substituted section 80C does not require that the investment for claiming deduction u/s 80C of the I T Act has to be only from income chargeable to tax.Therefore, the only condition for claiming the deduction u/s 80C is actual investment.Source of investment is immaterial. You can claim deduction of Stamp Duty payment even if same is paid out of loan from brother.
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Do Not Pay Gratuity Over Rs 20000 In Cash.
2007-03-09 03:50:00
Is it an allowable expenditure ,(100%)if we disburse gratuity settlement by cash to employees under income tax act,.Please refer rule6DD,sec269ss &40A.Your Email : raja@ayyanar.comThere is no application of section 269 SS in case of payment of gratuity in cash exceeding Rs 20,000 because the said section 269SS is only related to receipt of loan or deposit in cash .However, Section 40A (3) provides that in case any expenditure ,barring the cases enumerated in Rule 6DD ,is incurred in cash exceeding Rs 20,000, such expense is not allowable for computation of income.Section 40 A(3) is given as under"40A(3) Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft twenty pe...
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Interest u/s 24 Is Allowed Even Without Actual Payment!
2007-03-05 03:58:00
A salaried person has taken housing loan, but the EMI has been paid from the account of his daughter in law.Is he eligible for deduction for repayment under sec.80 C & 24 ajay.manchanda@khannapaper.comYour question involves two types of deductions-one u/s 24 of the I T act and another u/s 80C.Deduction u/s 24There is nothing in section 24 of the I T Act which compel one to pay the loan borrowed or interest thereon , by himself. In fact , section does not impose does not restriction that interest is allowable only on payment of interest. The interest u/s 24 of the I T Act is allowable even on due basis.Section 24 states:"24. Income chargeable under the head Income from house property shall be computed after making the following deductions, namely: (a) a sum equal to thirty per cent of the annual value; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:"As you can see...
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Teaching Is Profession!
2007-03-04 17:32:00
I work as a freelance teacher for IIT entrace exam coaching institutes. If I take all the classes assigned to me in a given month I get a flat professional fee for my services. In months where I have no work I don't get paid. For the year 2006-07 my total income is Rs.3,60,000. My questions area) Under what head do I have to declare this income? Is it salary or income for business or profession.b) I and my wife are both PhD's. Pooling our previous savings and also availing a bank loan I bought a car and use it commute to the place of work. Can I claim depreciation for the car?(c)My office is my home. Can I claim rent paid as expense? santy_5@......comAs you are paid by coaching institute, I presume they also deduct the tax at source.You have not given any details regarding contract signed with the coaching institute, but your earning is certainly in my view is "Income from profession" ,if you are not appointed as an employee by the coaching institute.In case, you are not e...
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No Exemption For Gain on Depreciable Assets!
2007-03-04 08:30:00
I have purchased commercial property 1999. sold commercial property 10.1.2007. Claimed depreciation.Since claimed depreciation Whether it become long term or short term capital gain. Whether i can get benefit investing in REC Bond. Whether i can keep deposit in capital gain Bank till 6 month from the date of sale and invest in property in next financial year. salian@vsnl.comSince you have claimed Depreciation on the commercial property , you must have business income.In that case, any gain on the sale of the commercial property is a short term capital gain. This is by virtue of section 50 which is special provision in case of computation of capital gains on Depreciable assets.The section 50 is as under :"50. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sec...
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Exemption Is Allowed on Gain on Depreciable Assets
2007-03-04 08:30:00
I have purchased commercial property 1999. sold commercial property 10.1.2007. Claimed depreciation.Since claimed depreciation Whether it become long term or short term capital gain. Whether i can get benefit investing in REC Bond. Whether i can keep deposit in capital gain Bank till 6 month from the date of sale and invest in property in next financial year. salian@vsnl.comSince you have claimed Depreciation on the commercial property , you must have business income.In that case, any gain on the sale of the commercial property is a short term capital gain. This is by virtue of section 50 which is special provision in case of computation of capital gains on Depreciable assets.The section 50 is as under :"50. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sec...
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Interest Allowed But Not Principal Amount On Home Loan!
2007-03-03 19:26:00
I have taken housing loan in 1999 for Rs. 1.53 lacs and then addition loan of Rs. 3.50 lacs for addition to the same house and constructed first floor. Again I have taken one more housing loan and made slight modification to the same house. I repeat I have three housing loans and all the loans for the same house. Further in the above 3 loans, 2 loans are for construction of additional area for which approved plan is available I wanted to know whether i am eligible for deduction under 80C for all the three loan instalments paid by us or only the original housing loan I have availed. Kindly enlighten me. ramaprasadjoshi@yahoo.comAlthough you have asked about section 80C deduction, I also cover the interest allowance u/s 24 of the I T Act because that deduction is more than principal payment.Deduction of Inter estInterest u/s 24 of I T Act which states:"24. Income chargeable under the head Income from house property shall be computed after making the following deductions, namely:(a) a s...
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Expense on Grandmother Is Also Allowed u/s 80DD
2007-03-03 17:21:00
Need your kind assistance in understanding the deduction allowable under this section of the IT Act. My father is retired and my mother is a housewife. My Grand mother (mother's mother) is fully dependent on me for her survival and medical needs. She has been certified by the required medical authority as handicapped. My uncles don't take care of my grandmother because they don't want to incur her medical expenses.My employer says that since the dependent is my grandmother I am not eligible to get the 80DD deduction. He further says taking care of grandmother is out of love and affection and doesn't qualify for the said deduction unless it was a blood relation s_vaman@.......com Your employer has misread the provision of section 80DD.If your grandmother is certified as handicapped,you will get the deduction u/s 80DD because the 'dependent ' is defined as below"(b) dependent means(i) in the case of an individual, the spouse, children, parents, brothers and sisters of theindivi...
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Money Without Limit Can Be Brought In India On Declaration!
2007-03-03 09:00:00
Dear sir,as i am planning to return to India for vacation after working here for one year the first time i want you to tell me how much us dollars i can carry with me in person and what is the procedure to declare at Mumbai airport and proceed to my town. subuooty@....co.inAs per RBI guideline, a person can bring in any amount of money in India , but after a limit you will have to declare at the custom office on landing in India. Below is the excerpt from RBI FAQ on foreign exchange" 22. While coming into India how much foreign exchange can be brought in?A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form...
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List of Mutual Funds For 80C Deduction!
2007-03-02 19:16:00
For AY 2007-08, what mutual funds are eligible for Sec 80 C?Your Email : colmitra@..........com The mutual funds eligible for 80C deduction are almost all the mutual funds which are recognized by SEBI. Section 80C under sun section [xiii] states as under"(xiii) as subscription to any units of any Mutual Fun d notified under clause (23D) of section 10 or from the Administrator or the specified company under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;"You can get the list of notified mutual funds u/s 10[23D ] here.
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Deduction For Educational Loan Is Allowed To Person Who Studies!
2007-03-02 17:37:00
I have taken an Education loan for Rs 8 Lakhs for my daughter's higher education in U.K. Any deduction allowed in my loan repayment ? and how much ?mailto:dbaruah@gmail.comSorry, if you have taken the loan of for your daughter , neither you nor your daughter can get any deduction u/s 80E because the deduction u/s 80E is allowed to only that person who takes loan for his studies and not for others. Section 80E is given 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 in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education."Budget 2007 update [thanks Sanjeev!]It has been proposed that the educational loan taken for the relatives which is defined as Wife and Children shall also ...
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Yes , Get deduction u/s 80GG
2007-03-02 16:28:00
I am a salaried employee...I m paid by my employer:-TOTAL SALARY = BASIC PAY + DA.NO HRA IS BEING PAID AT PRESENT...FURTHER, I AM PAYING AN AMOUNT OF RS. 2000/- PER MONTH TOWARDS MY HOUSE RENT IN THE RURAL AREA NEAR TO MY JOB LOCATION...CAN I GET EXEMPTION IN THIS REGARD, AS ACTUALLY I AM PAYING THE RENT, HOWEVER NOT BEING PAID HRA... parveensatija@rediffmail.comSince you are not getting the HRA and paying rent , you will get deduction u/s 80GG of the I T Act. Deduction u/s Section 80GG shall be the least of followingany expenditure incurred by him - 10% of his total income orRs 2500 per month oror 25% of the Total Income for the year .Tags: Deductions, Income Tax

Coaching Institute Fee Is Not Allowable Deduction U/s 80C
2007-03-02 03:18:00
My question is about allow ability of fees paid to a coaching institute u/s 80 C .This institute gives education for 3 to 4 hours for PMT exam preparation.Name of the Coach ing institute SHRI CHAITANYA EDUCATIONAL COMMITTEE duly registered at Indore. singhal_dev2006@rediffmail.comI do not think that deduction 80C is allowable for tuition fee of a coaching institute. Read carefully the provision contained in [xvii] of Section 80C , given below“as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,(a) to any university, college, school or other educational institution situated within India;(b) for the purpose of full-time education of any of the persons specified in sub-section (4);“So, what the sub section states , that payment should be to any educational institute and for the purpose of FULL-TIME education. A coaching institute is not imparting a person an Education , but ...
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Deduction of Interests Is Allowed Even If House is Not Used For Residential
2007-03-01 19:30:00
I have purchased my first flat in 2006-2007.Now i am paying EMI. But due to the distance of that area approx 30 km from my place of work I have not occupied that flat and I am staying in company provided accommodation. Neither I have given for rent.Can I get tax benefit on EMI paid to bank.May i request u to clarify at the earliest: dash_bhramar@rediffmail.comYes , you can get the deduction of interest and principal payment because the I T Act has special provision for such case when a person can not occupy for the reason of employment , even in that case ,the annual value of the house is to be taken as NIL value and interest is to be allowed as deduction.Section 23[2] of the I T Act is very specific.Read this answer and give attention to section 23[2] quoted therein which specifically provide such relief to a person who on account of his employment can not occupy the house.Tags: House Property, India, Income Tax
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Tax Planning Is An Art!
2007-03-01 17:07:00
I have one property in Pune for which I am paying a regular EMI. I am planning to invest in another property say for Rs. 40 L and after an year sell the same in 60 L. The Capital gain by selling this property will be 20 L . Can I repay the loan of my first property with this Capital Gain without attracting any Income tax.Logically It should be possible but my Bankers are not able to provide me a definite answer. Can some one please answer this query.An Additional question on the same. If I buy a dental clinic for my wife with this Capital Gain will I still be able to escape from paying tax on this capital gain vipul.gupta@wipro.comFirst of all , you should know that the second property which will be sold by you will be short term capital gains because the property in question will be held by you for only one year. Therefore, there will not be availability of any type of exemption provided under the I T Act whatsoever. All exemption is provided only for long term c...
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Amount paid to TATA AIG INSURANCE for accidental d...
2007-03-01 16:57:00
Amount paid to TATA AIG INSURANCE for accidental death insurance & protaction for HOME LOAN of ICICI will give benifit u/s 80C. hk.vyas@binan.co.inWhile the accidental death insurance is allowable u/s 80C , insurance for protection of home loan is not allowable because no such provision is existing in the I T Act.Tags: Deductions
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Demand Can Not Be Collected Without Service Of Demand Notice!
2007-03-01 03:35:00
I am central government employee ,get transferred all over India. In 04-05 I was posted in Karnataka and submitted my returns. In Sep-05 I was transferred to UP. next return filed in UP duly applying for change in address. Now inFeb -07 I received a letter from IT Karnataka as per their records a sum of Rs 2100 is outstanding against me .The payment details of the same needs to be submitted within 7 days. As I have not received any demand notice neither any copy of same is sent, now I am not able to verify if something is really due . May I request them to transfer the account to UP duly asking them details of demand. Will it attract any penal interest for this period.: cmmswr@..........com No demand can be collected without proper service of demand notice. I presume that the demand is related to our assessment u/s 143[1] and that the A.O might have sent you the demand notice on the last address known as per return. So the A.O may not be at fault 100%.You should take steps as under:...
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