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Income Tax Questions asked by tax payers and answers given by Tax Experts. Name & location specific details are removed from the original questions to protect the privacy of our customers.


On this page:

  1. Deduction of HRA from Taxable income
  2. Plot in name of my wife
  3. Tax on Non-Residents
  4. Defective IT Return
  5. Joint holdings
  6. Tax on Professional Taxable Income
  7. Perquisite Tax
  8. 80C Tuition Fee
  9. What is Dearness allowance?
  10. TDS on Bank Deposit
  11. TDS on furnished bachelor accommodation
  12. Residential Status of AOP
  13. Retrenchment Compensation
  14. Indian Citizen going abroad on deputation
  15. Tax on Tuition Fee Received
  16. Trust Taxation & Filing of Return
  17. Penalty for late filing
  18. Carry forward business loss set-off against STCG

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Deduction of HRA from Taxable income

Sir, I want to know that if I am getting Rs.6800/- p.m. as HRA in my salary and I want to live on rent, what should be the exact rent I should pay to any landlord so that the whole amount of HRA is deducted from my taxable income and I don't have to pay any service tax on rent? Kindly advice.

Rs.6,800 + 10% of your Salary. Service tax on rent depends on your landlord and you have no control on it.

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Plot in name of my wife

I have purchased plot in name of my wife from my income. Is it mandatory to show the same in IT return? I am a PSU salaried person.

Yes

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Income Tax Questions - Tax on Non-Residents

I am being hired by a company in New Jersey USA as a contractor working in Bangalore for IBM.

I'm getting paid from the USA for work performed in India. The firm I'm working for is getting paid via IBM under the contract agreement.

I will be in Bangalore for up to two years but not going to be a resident. Will I have to pay India taxes even though I pay taxes in the USA?

We are not too sure as to how you are sure that you will not be a resident. If you stay in India for 2 years you are likely to become a resident.

You would be governed by DTAA (Double Taxation Avoidance Agreement) between India and US. You are likely to end up paying at least some tax in India

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Defective IT Return

For the A.Y 2008 - 2009, I have filed a return wrongly using the ITR-1 for the AY 2009-2010.

Please assist me whether I need to file a defective return and if so what are the formalities

It is an acceptable defect. If the assessing officer informs about the defect you can rectify within the time allowed.

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Income Tax Questions - Joint holdings

Please throw some light on the following queries.

  1. If I give money to my spouse to manage expenditure and do some savings, will it be added to her income and taxed?

  2. In case of any interest/ gains from joint holdings, who will be taxed for any such gains?

Amount given to spouse for managing expenditure and savings is not chargeable to income tax. In case of joint holdings, the person who has invested the money would be liable.

In case, the amount is out of ancestral source for joint holding as a family, a HUF assessment can be made.

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Tax on Professional Taxable Income

Please suggest me what are all concessions or rebate I can claim from my professional taxable income? I am a doctor by profession.

Currently, there is no specific exemption from Professional Income. However, the general deductions like the LIC Premium, PPF, etc. would be eligible.

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Income Tax Question - Perquisite tax

Whether payment of perquisite tax by employer for providing housing accommodation to the employees is in order?

Yes. It can be claimed as exempt under section 10(10CC).

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Income Tax Question - 80C Tuition Fee

Is there any limit to the amt of tuition fee which is exempt under 80C within overall limit of 1 Lakh?

The only ceiling is maximum 2 children.

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Income Tax Question - What is Dearness allowance?

What is difference between dearness allowances and dearness payment? Please illustrate with an example.

On most occasions they are used interchangeably

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Income Tax Question -TDS on bank deposit

I have invested certain amounts in Fixed deposits with banks that are to mature in the FY 2011-12.

As per the terms no interest is payable to me till the date of maturity. Banks have however deducted as tax as per their software and have deposited as TDS.

If I include such accrued tax which is not legally due to me I will be paying tax at a higher rate this year.

Moreover is it not blatantly unfair to deduct tax on amounts not due to me under any law.

I understand that apex court has decided certain cases to the effect that TAX is payable only on the amounts due or that legally enforceable.

Should I have show such accrued income as my income just to tally my TDS effected by banks to liquidate their liability under the directions of IT Dept.

I am aware that I should account the interest received in the year I actually receive for which I have no doubts.

Is there any way to claim refund the TDS already deducted and remitted by Bank to the treasury in the AY 2010-11?

Your concern is correct. You can offer your interest income in the year of receipt. However, the Bank would deduct as and when it accrues.

In such circumstances, the option available to you is that you can include the TDS paid by bank for your interest income as income of the relevant previous year, since it is deemed to be received in that year and pay tax for that portion. Balance amount received in the last year can be taxed in that year.

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TDS on furnished bachelor accommodation

NHPC (A Govt. of India Enterprises) gives lease to accommodate the family any where in India and same time a furnished bachelor accommodation/field hostel is provided to the employee posted at projects.

NHPC deducted perquisite value only on lease.

My main query is should it not deduct perquisite on another accommodation (field hostel/ bachelor accomodation) provided for only Rs 240 per month?

If the project site is in remote area not liable to TDS.

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Income Tax Questions - Residential Status of AOP

What is the residential status of AOP and what is the tax treatment of AOP.

AoP is resident, if it is controlled wholly or partly from India. Else, Non Resident. Tax treatment depends on the taxability of the members.

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Income Tax Question - Retrenchment Compensation

My son was employed in an Insurance Company from June 2008 to April 2009.

He was retrenched / resigned and the company has paid him notice pay of Rs.112503 as indicated in Form 16, apart from exgratia, leave encashment etc.

Please advice, whether the notice pay of Rs.112503 is taxable?

Rs.112503 is taxable. However, if it is governed by the Industrial Disputes Act, you can claim exemption u/s 10(10B) to that extent.

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Income Tax Question - Indian Citizen going abroad on deputation - Taxability at Both places

Also my daughter working in one of the MNCs was sent on deputation to USA - Atlanta - Georgia from 05-10-2007 to 25-12-2009 wherein she received salary from India.

But in USD directly credited to her Bank of America Account.

She was also in receipt of Living allowances etc in USD at USA and was deducted TDS for Federal, State and Local Taxes from her income.

TDS was also deducted from her salary for FY 2007-08 and FY 2009-10 in India.

What is the tax liability of her in India during this period and whether she is eligible for any double taxation relief?

Your daughter is liable for tax both in India and US subject to DTAA.

As per the Indo-US DTAA, your daughter would be resident in India, for the taxable year ending 31.03.2008. If she satisfies the following three conditions she would be taxable only in India: -

  • the recipient is present in the US for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year;

  • the remuneration is paid by, or on behalf of, an employer who is not a resident of US; and

  • the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in US.

If these conditions are not satisfied then the Salary may be chargeable in US. Hence, for the period of rendering service in US, the Salary may be chargeable in US and for the period of service in India, it would be chargeable in India.

However, for the taxable year ending 31.03.2009, she would be resident in US, had she has not come to India. Her salary would be taxed entirely in US. However, since some salary is received in India, you need to file the return of income and claim exemption based on relief under DTAA.

For the taxable year ending 31.03.2010, it is a complicated question. She would be resident in US and may also be resident in India. However, since her permanent residence would be in India, it is preferable to treat her as Resident in India. Even then, the US is having more preference in charging the salary as the amount is chargeable where the service is rendered. Hence, for the period of rendering service in US, the Salary may be chargeable in US and for the period of service in India, it would be chargeable in India.

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Income Tax Question - Tax on Tuition Fee Received

I am taking home tuitions for std 9, 10th classes. My yearly collection is 60000 to 120000 in different years. What method should I use to show my income to I.T.dept? I have my PAN Number too.

It is to be shown as Other Sources. However, you can claim expenses incurred in this regard including depreciation on furniture, etc., and show the net income only.

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Income Tax Question - Trust Taxation & Filing of Return

Last year income of our new registered charitable trust was only 30000. Do I need to file income tax return and get this audited also? Our trust is also registered u/s 12A (2009).

Audit is not required. But you need to file return.

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Income Tax Question - Penalty for late filing

I have no time left to file return this year before 31st July, 2011. What could be penalty, if the same is filed in August?

Up to 31.03.2012 - no penalty, only interest @1% per month would apply.

However, non payment of advance tax would attract levy of interest under section 234B or 234C, only if advance tax is applicable.

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Income Tax Question - Carry forward business loss set-off against STCG

Clarify whether carry forward business loss which included unabsorbed depreciation can be set off against short term capital gains from the sale of shares of an unlisted company?

Yes, the unabsorbed depreciation can be set-off against Short Term Capital Gains.

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The limit of your present understanding is not the limit of your possibilities. Guy Finley



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