Income Tax Questions and Answers By Experts
These Income Tax Questions were raised online by tax payers. And the answers were given by Tax Experts. Name & location specific details are removed from the original questions to protect the privacy of our customers.
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I am an Indian and a NRI and my wife is a US citizen.
My wife want to send me funds to my bank account in India to buy a residential property in India.
According to the law is there any limit on amount of funds for inward remittance to India?
As far as the Income Tax law is concerned there is no limit for gift from spouse.
I am a professor. I have been invited to be a visitor for doing research, at a Foreign Institute which is supported by the UK Govt and they offer me a salary of 3000 (GBP). And it is tax free.
No exemption is available currently for research work. However, if it is part of your educational pursuit in research, you may be eligible for exemption under section 10(16) as 'stipends and scholarships'.
Moreover, the charge to income-tax of any income depends on the residential status of the individual, i.e., whether he is resident or non-resident.
In your case, if you take employment outside India and your stay in India for the financial year does not exceed 182 days, then you would be non resident and would not liable for tax on such foreign income.
Our company had taken a loan few years back which got recheduled this year. However the bank has charged us @ 30% of the sacrifice amount on loan rescheduled.
Please let me know whether this amount paid could be claimed as business deduction.
The Scheme of Waiver needs to be looked into. If the amount charged is to be adjusted against the principal outstanding then it is not eligible for deduction.
However, if it is an amount charged separately in the nature of processing fee, then there is a possibility of claiming deduction, though the Department may take a stand it should stand set-off against the amount sacrificed by the Bank.
Home loan is taken by an unemployed wife. She is the loan applicant and the owner of home. The loan has been sanctioned to her on the basis of her husband's salary, as her husband is co-applicant.
Can husband claim for income tax rebate & deduction in respect of the interest?
Combined reading of section 27 and section 64 it is possible for the husband to claim the benefit even though the property is in the name of the spouse.
Sir, as my mother is suffering from neurological problem, under section 80GGC Can I claim income tax rebate?.
Section 80GGC is for Donations to Political Parties. For medical treatment relating to neurological diseases, section 80DDB is the appropriate section.
If you fulfill the conditions mentioned therein, especially a certificate from neurologist, then you may be eligible for deduction.
My father having the land which having market value appx.35 lacs. He wants to sell the same then what will be the tax liability.
The person has never filed the ITR earlier. Recently he has applied for PAN. The land is a inherited property.
Land is in rural area as the municipalty is appx. 35 km. far from that land.
The land is situated in Rajasthan.
The population of that village is appx.12400.
The age of the person who is selling the land is of above 65 yrs..
Is it mandatory to file ITR for the FY due to this transaction?
As the population of the village is more than 10000, the gains from sale of land will be chargeable to income-tax. However, there has been a judicial decision that the place should be a municipality or cantonment board or a notified area and not such other area like panchayat, etc.
However, there could be different view possible, since the criteria of 10000 population has been mentioned.
Hence, it is better that you consult a local tax practitioner in Rajasthan since they know better about the place where the sale is happening and also whether it is notified or not under section 2(14). Age of 65 years is not a criteria.
I was an NRI and I had an EURO account in Germany last year. I returned back to India and am Non-NRI now.
I would like to transfer money from my own bank account in Germany to the normal savings bank account in India.
Should I have to pay taxes here if I transfer around Rs.500000 at a stretch? How much percentage of taxes would that be? What is the usual calculation for the same?
If the money to be transferred was already received outside India and it is now only transferred to India, then you would not be taxable for this transfer.
However, if you are receiving the money for the first time (i.e., from source of the transaction) then you may be chargeable to tax.
Moreover, whether tax was payable at the time of happening of the original transaction which is now being transferred to India would also bear significance in the taxation of the transaction.
I am a senior citizen (68) depending upon pension and income on deposit interests. My annual income is just 1.25 lacs only well below the exempted limit of 2.40 lacs for senior citizen.
Every year I furnish Form 15-H to my bankers and they waive TDS. Recently I produced a CD album.
A popular recording co., approved the album and I transferred the copyright to it.
Even though I furnished the form 15-H for waiver of TDS, the company says it would go ahead with TDS at the time of making royalty payment to me.
When I protested, the company says I will have to get some kind of certificate from IT dept. for waiving TDS.
Please clarify whether the company is right, when my banker accepts my self declaration in Form 15-H to waive TDS. Thank you.
Form No.15H cannot be used for all the scenarios. It is to be applied only for Interest other than Interest on Securities.
For lower deduction of TDS in case of Royalty (Section 194J), Form No.13 should be submitted to the Assessing Officer who would issue a no deduction certificate or lower deduction certificate to you which can be utilised by you with the Company. Hence, the company's proposition is correct.
I understand that for a home loan taken, we can get exempt maximum 1 lakh principal and 1.5 lakhs interest that is paid on home loans.
How ever, I see also note on some website on NO Limit to interest paid on home loan ONLY if the house is let out.
IN my case, I am staying in chennai .
I am building home in Coimbatore - two floors. one for self another for let out. How I can apply no limit interest for home load deduction ? Am I eligible.
If a part of the house (1 floor) is self occupied or is not occupied due to employment elsewhere with no benefit derived therefrom, then the interest thereon would be restricted to Rs.1.5 Lakhs only subject to fulfillment of other conditions.
However, in respect of the other floor let out, interest can be claimed in full.
In planning the tax benefit, the loan can be treated as utilised wholly for let out portion first and the balance for the self occupied portion, though however in practice, the standard rate of 50% (since 2 floors) is used.
I am a retired officer of PSU. I was retired on 31/10/2009 on completion of 60 years of age.
As a result of increase in pay scales, arrears have been paid to its employees as well as to retired employees.
I shall be talking to you about retired employees as I am one of them.
The revised Basic Pay etc. have been made effective from 01/08/2007 . As I retired on 31/10/2009 I have also been paid difference of salary,gratuity and leave pay due to pay hike for 27 months.
The controversy and confusion is with regard to Provident Fund contributions. Some of the employees have opted for pension and few have not opted for Pension.
For those who have not opted for Pension employer’s contribution shall also be there and interest shall also be paid. The additional amount thus received by way of difference in PF shall not be taxable. For pensioners there shall not be any contribution from employer’s side .
In case of Pensioners PF has been treated as part of salary and it is also taxable. Retired Pensioners have lost from both the side. They have not received any interest for their PF contributions and also the part of PF which is treated as part of salary is Taxable. How far it is reasonable and what Tax laws say about this?
Law sometimes favours certain persons and proves to be against certain other persons, which is inevitable in the scheme of taxation as has been consistently held by the Courts of Law.
Provident Fund and Pension are two different schemes. While in PF the amount is accumulated and withdrawn in lumpsum at periodical intervals to the extent of the actual amount contributed alongwith the interest, in the case of the Pension, there is periodical payments for indefinite period though the contributions made may not match with the pension received.
That could be one of the reasons for providing exemption to PF and taxing of Pension. However, even in Pension, if the amount is commuted then two third or one third of 100% commutation could be exempt from Income-tax.
How can I know that donation deduct 100% and 50%. Please give me some details.
Usually the receipt issued for the donation would contain the details of approval and the deduction available, i.e., 50% or 100%.
If it is not available, it is better that the details are obtained from them, because, it is essential for claiming deduction under section 80G.
We have short term capital gain in current year and we have c/f of unabsorbed dep also.
My question is, can we set off STCG against Unabsorbed depreciation?.
You have not mentioned about the year to which the unabsorbed depreciation relates. If it relates to AY 2002-03 or thereafter, then yes, it can be adjusted.
We had given loan of Rs 5 lakhs to a party. In case if the party repay us some of the amount in cash i.e., Rs.20,000 per day for 5 days (total Rs.1,00,000).
How will the tax department treat the transction?
It is not acceptable. They can levy penalty equivalent to the transaction value.
My Mother is getting pension after the death of my father. She get the arrears through 6th pay commission; is this taxable as bank has deducted the TDS on total pension credited in her account.
If the arrears is relating to the pension period then yes. If it relates to the service period, then you may not be chargeable.
I availed home loan of Rs.12 lakh in 2006. It was disbursed from Dec 2006 to Feb 2008. Balance Rs.1.20 lakh last installment for cost of villa was to be disbursed by bank on demand from builder.
95% cost has been paid by Feb 2008. The builder delayed possession and bank started EMI from June 2010.
I also took loan from employer to meet demand of builder for EDC (development charges to Haryana govt) Rs.76,000/- in August 2010.
Now please compute three years period (advise me the date, month and year) within which the builder should complete the villa construction and give me possession so that I can meet the condition of section 24(b) to avail tax benefit on interest upto Rs.150000 p.a.
In case I avail loan from employer or a bank as and when demand for the last installment/payment is made by builder at the time of possesion (about Rs.1,20,000 plus other charges) shall I be eligible to get tax benefit on interest upto Rs.1,50,000.
First instalment seems to have been taken in December 2006 and hence the construction should have been completed by 31.03.2010.
Where however, if it is delayed but completed within 31.03.2011, then interest relating to loans taken before 01.04.2007 could be restricted to Rs.30,000 and in respect of other loans the limit remaining unexhausted upto Rs.1.5 Lakhs could be utilised.
My daughter and grand daughters have saving account in HDFC Bank. They earn approx Rs.5000 on interest.
All of them are persons of Indian origin residing in USA. Bank deducts 30.3% TDS on interest. What is the rule and how it can be saved ?
For Non-Residents 30.9% is the applicable rate of TDS.
If return of income is filed in India and it is found that there is no tax liability refund can be obtained.
However, Interest on NRE Accounts are exempt and there should be no TDS in those cases.
I have some problem regading determination of residential status of an individual.
From 29th Aug to 30th Aug (1 day) he came to dubai for his final interview. Reached Dubai on 28th Sep on work visa and joined office in Dubai.
Went back to India on 30th Dec and stayed till 8th Jan on business visit. Before 28th sep, he was employed and was working with India. Only he went out of india for 7 days in Aug on tourist visa.
The number of days of stay in India based on the facts come to 172 days, viz., 30+31+30+31+29+1+27-7+2+8, which is just equivalent to the statutory requirement for being resident, in case a person leaves India for taking employment outside India. Hence, he should be Resident.
If I have to sell a residential apartment then what is the time period beyond which small term capital gain is not applicable.
Also from which date the period is calculated eg. date of agreement, date of possession, date of OC.
36 months is the time upto which it is short term capital gains. Date of actual registration or completion of construction is proper date.
However, an partly performed agreement for sale coupled with possession of property would also be deemed to be sale for which the date of possession would be the criteria.
If a person gets the age 65 with in previous year then he can take exemption as senior citizen?
Yes. The criteria is at any time during the previous year and hence, the exemptions relating to Senior Citizen would be available if he is 65 years or more as on 31st March of the relevant financial year (i.e., Previous Year).
My wife and my sister both invested in equites shares and F&O using my wife's demat account. Both has 50%-50% joint venture.
My sister has no demat and trading account. A net profit of Rs 3,90,000 occured in trading. How ITR is filed?
It is permissible to open Demat Accounts in joint name. If the account you are mentioning is in such a form then it is possible to say that it is assessable as AoP.
However, the tax rate of the AoP would depend on the facts of whether the members, viz., your wife and your sister are having taxable income.
If the account is not in joint name but clearly evidenced by a Deed of Agreement as to the Joint Venture, then also it is possible to be treated as on AoP.
If there is nothing to prove that it is a Joint Venture, then the entire income is assessable in your wife's hands.
Probably, an attempt could be made to prove to the assessing officer that the amount was sourced from your sister with the intention of being utilised on behalf of your sister, which may not be considered favourably by the Department.
Whether u/s 4 of wealth tax act, deduction of 1500/- is permissible or not in case of clubbing of assets of Minor son or Daughter?
I want to purchase a property in the name of my wife who is a housewife. She has no source of income. The property will be purchased by raising a home loan by bank in my name of which co-applicant will be my wife. My question is that whether I will get tax exemption in interest upto Rs. 1,50,000 or not.
Yes. Because of operation of section 27 and section 64(1), you will continue to be the owner of the property and interest would be deductible from your income.
Could you please advise on the following example:
Income earned Rs.2.50 lac (net after paying STT and brokerage).On the above income is IT computed as laid down in IT rules or is it sufficient to submit the STT certificate. The question arises because it looks as though a double tax we are paying,
Since, the income is purely from trading of share is it necessary to provide audit certificate to IT Authority and if so up to what volume (in terms of rupees).
STT is a transaction tax and not income-tax, though initially the department had a mistaken view of treating it as an income-tax. Just because sales tax is paid, it does not mean that income is exempt.
You need to submit the accounts only and no need to submit the STT Certificate initially and needs to be produced only if is called by Assessing Officer.
You require to produce Audit Certificate if the sales turnover exceds Rs.40 Lakhs (Rs.60 lakhs for the year ending 31.03.2011).
Under 001 of the AIR information, should transfer from UAE to an indian NRE savings account be disclosed if the transfer amount is greater than Rs.10 lakhs?
Under code 005, is it for company IPO or including secondary market purchases from NSE? Also whether the Rs.1 lakh threshold is for each and evey share acquired or aggregate of all the share?
It is only cash deposits that is required to be reported and any funds transfer would not be included therein.
It is IPO and Rights Issue that is covered and not the secondary market acquisitions. The amount is for each company.
I & my wife have two bonds (Rs.1 lakh each) details are as follows:
1) Interest rate : 9.25 % Date: 1/sep/2007 to 6/12/2010 Interest earned : 34609 INR
2) Interest rate : 9.25 % Date:6/sep/2007 to 6/12/2010 Interest earned : 34609 INR
Income Tax Questions:
a) What should be the TAX deduction (plz tell me the amount for each bond)
b) I read in your website that for women with income less than 190000 INR there is no income-tax, but in my case if we combine both the bonds the amount is 269218 INR
But today when i spoke with bank people they said the amount to be given us is 261326 INR, how it is possible, how much they have deducted the tax and on what basis.
b) If i again go for FD with this amount what should i do for getting least amount of tax deduction at the time of maturity of bond.
10% is the TDS rate only on Interest portion.
Maturity value computation differs since the TDS is to be deducted in each year and therefore the Bank might have added to your FD only the net amount of interest (after TDS) which, though not fair, is the compulsion of the provisions of the Act.
Assuming no clubbing is applicable between you and your spouse, if any or both of you do not derive taxable income, then Form No.15G (for senior citizens 15H) could be given and if any or both of you have taxable income then you can apply in Form 13 to Assessing Officer for lower deduction of tax.
Sir, I changed my job in the middle of a financial year. Does the amount I got for my leave pay (earnrd leaves) from my previous employer is taxable? Or does it come under Section 10 exemption?
If received on termination from the previous employer, then exemption can be availed under section 10, subject to the conditions therein.
Whether exemption u/s 54B available for any advance given for purchase of agricultural land in the year of capital gains?
If the land has been ultimately purchased, there is no reason why the advance should not be eligible for exemption under section 54B.
Is it required of Dubai based firms to deduct tax at source out of payments made to Indian concerns which provide manpower recruitment to them?
Yes. The foreign enterprise is required to deduct tax at source in respect of payments to resident person under a contract work.
How much amount is the maximum for non taxable income for the agricultural sector.
Agricultural Income-tax Law depends on each State in India. Kindly refer to the law in your local State as you have not mentioned the State.
I want to give gift of Rs.15 lacs to my mother. She will invest the money in FDR & she will get interest.
Will the interest be clubbed in my income for calculating tax?
Not liable for clubbing.
I incured loss In F&O transaction of shares, is the Loss to be treated as Speculation Loss Or Short term Capital Loss? For how long it can be carried forward and set off?
Speculation loss is loss arising from transactions which are settled without delivery of shares.
Hence, if F&O transactions have been closed without delivery of Shares then it is speculation loss. If delivery takes place, then it is not speculation loss.
Speculation loss can be carried forward for 4 years and can be adjusted only against Speculation Gains. Other than Speculation loss can be carried forward for 8 years and can be adjusted only against the respective head of income.
A limited company carrying on business of sub-broker of shares, the company only earns brokerage.
In this year, the copany (as a client) did share trading & incurred losses. Can this company set off this loss with his brokerage income.
The loss incurred in trading by the Company, if it is not speculative in nature, can be set-off against its brokerage income.
My employer took my Investment declaration this month May 2011 for the financial year 2011-2012.
I would like to buy a house property this year. I have declared it. But they are deducting tax.
Employer is asking me to submit the documents right now to stop deducting tax. As of now I don't have any documents.
Is it legally correct? Do he has the right to deduct my tax inspite of providing the declaration?.
Your employer is statutorily correct. Because, declarations are always required to be accompanied by the required documents relating to the declarations and certified as 'I, ________ (your name), do declare that what is stated above is true to the best of my information and belief".
It is necessary that documents are enclosed. Only few employers are very cardial and rely greatly on the employee's statements and give much time for submission of documents.
There are no statutory remedies available to you.
All human knowledge thus begins with intuitions, proceeds thence to concepts, and ends with ideas. Immanuel Kant