CLUBBING PROVISIONS FOR MINOR’S INCOME!
Exemption for minor’s income fixed at Rs.1,500 in 1992
Has not been revised even after 20 years of the provision!
Until 1991-92, all income of a minor, other than that covered by the special clubbing provisions of Section 64 of the Income-tax Act was entitled to independent assessment in his own hands. Circumventing the said clubbing provisions not being difficult, a number of avenues for augmenting income and wealth assessable in the minor’s own hands were wide open. It was thus possible to avail of valuable tax savings through the independent tax assessments of minors.
Such independent income/wealth enjoyed by the minors became a source of envy for the Finance Minister, who while introducing the Finance Bill, 1992 struck a major blow on tax planning for minors by providing that all income/wealth of a minor would be liable to be clubbed with the income/wealth of his parent. Section 64(1A) thus provides that “in computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child.” (more…)
WELCOME RELIEF FOR HOUSING DEVELOPERS!
Gujarat HC confirms ITAT’s liberal interpretation on tax holiday for residential projects u/s. 80IB(10)
Housing developers having undertaken the business of developing and building residential housing projects, with a view to avail 100% deduction in respect of their profits as prescribed under Section 80IB(10) of the Income-tax Act, can truly heave a sigh of relief, with the Gujarat High Court finally resolving some burning controversies raised by the Revenue over the past few years.
Around 50 Tax Appeals filed by the Department have come to be recently disposed of under a consolidated order passed in the case of ‘Radhe Developers, Shakti Corporation & Others’ by the Bench comprising of Hon’ble Mr. Justice Akil Kureshi and Ms. Justice Sonia Gokani, who were called upon to decide two key contentions relating to eligibility for claim of deduction under Sec. 80IB(10). (more…)
PRACTICAL TIPS ON CLAIMING TAX REFUND
Section 237 of the Income-tax Act provides for granting of Refund of excess tax paid or deducted in the case of a taxpayer, where such tax exceeds the actual tax payable by him. (more…)
FISCAL RESOLUTIONS FOR THE NEW YEAR!
YOUR ‘WILL’ CAN MAKE THE WAY!
The importance of executing a Will has yet not been appreciated to its fullest extent in the Indian society. It is, therefore, not surprising to come across several cases where in pursuance to the death of an individual, there are several family disputes and practical problems in the absence of the Will by the deceased. Don’t forget that the execution of a Will is very simple and at the same time non-execution of the same can create several difficulties. (more…)
PENSIONS & SOCIAL SECURITY FROM US & UK TAX EXEMPT!
Family Pension received by a Widow is entitled to Standard Deduction at 33.33%, subject to a maximum of Rs.30,000
Today’s write-up deals with some interesting issues relating to taxability of dues, family pension etc. received by legal heirs of a deceased employee, receipt of commuted pension by specified employees and Public Pensions/Social Security payments received from abroad by Indian Residents.
LEAVE SALARY TO LEGAL HEIRS EXEMPT!
Under Letter No.35/1/65-IT(B) dated 5-11-1965, the Central Board of Direct Taxes (CBDT) has clarified that the leave salary paid to the legal heirs of a deceased employee in respect of privilege leave standing to the credit of such employee at the time of his/her death is not taxable as salary. Similarly, under Circular No.309 dated 3-7-1981, the CBDT has also clarified that receipt of cash equivalent of leave salary, which the deceased Government employee would have got if he had gone on earned leave, by the family of the deceased employee, is not liable to income-tax. (more…)
TAX STIMULUS FOR MEDICAL INSURANCE
Section 80D allows deduction of Rs.15,000 for covering insurance for own family & additional Rs.15,000 for premium paid for parents
Medical Insurance is becoming increasingly popular in India with the increasing cost of medical treatment and hospitalization expenses. The benefit of having a medical insurance is that by making a small payment of insurance premium, the proposer can cover the cost of medical treatment and hospitalization of himself and his family members in case of need.
Section 80D of the Income-tax Act provides for deduction out of the gross total income of the taxpayer in respect of such medical insurance premium paid. The popular medical insurance policy offered by the General Insurance Corporation of India is the ‘Mediclaim Policy.’ Several private insurance companies recognized by the Insurance Regulatory & Development Authority (IRDA) also offer a variety of medical insurance products, the premium payment of which is eligible for deduction under Section 80D. (more…)
WEALTH-TAX SHELTER FOR RESIDENTIAL HOUSE!
One house or an open plot of land of upto 500 sq.mtr. is treated fully exempt from Wealth-tax irrespective of its value!
Under the present scheme for levy of Wealth-tax, all ‘productive assets’ are excluded from the definition of the term ‘assets liable to Wealth-tax.’ Accordingly, in respect of house property, the following have been treated as assets liable to Wealth-tax:
- Any building or land appurtenant thereto, whether used for residential or commercial purpose or for the purpose of maintaining a guest house.
- A Farm House situated within 25 kms. from the local municipal limits. (more…)
GIFTS FROM RELATIVES TAXFREE!
No stamped document required for gift of movable property,
But it is advisable to keep letter of gift from donor on record!
Several AM readers poured in their questions in response to the article last Monday on gifts and income-tax liability. Some of these queries which touch issues of popular interest are replied hereunder:
LIST OF RELATIVES COVERED
Query: Your article states that gifts received by an individual from his relative are treated as exempt, even beyond Rs.50,000 in a year. Can you please elaborate which relatives are covered for this purpose?
Reply: One of the important exceptions provided under Section 56 of the Income-tax Act, in regard to taxing gifts as income, is in respect of sums received by any individual from his/her relative out of natural love and affection. For this purpose, the term ‘relative’ has been defined to include the individual’s spouse, brother or sister of the individual or spouse, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual or spouse and finally the spouse of any of the above-referred persons. (more…)
PRACTICAL CASE STUDIES ON TAXABILITY OF GIFTS
Specified gifts received in cash or kind exceeding Rs.50,000 in value during the year are treated as income liable to tax !
Section 56(2)(vi) had cast income-tax liability only in respect of a ‘gift of any sum of money exceeding Rs.50,000’. In view of this clear language, any gift received in kind (not being any sum of money) clearly fell outside the liability for income-tax, irrespective of the value of such gift.
However, as per the provisions of Section 56(2)(vii) introduced with effect from 1st October, 2009, in case of nine specified properties as mentioned hereunder, received by an individual or HUF, either by way of gift or for a purchase consideration that is treated by the Assessing Officer as inadequate, the market value of such gift or the differential value of such purchase, if exceeding Rs.50,000, will be taxed as income from other sources. (more…)
COMPUTING TDS ON SALARY
Report all eligible exemptions & deductions to your employer to ensure non-deduction of excess TDS from your salary!
Section 192 of the Income-tax Act prescribes for tax deduction at source out of payments representing any income chargeable to tax under the head ‘Salaries’. The provisions for tax deduction at source from Salaries during each Financial Year are explained by the Central Board of Direct Taxes (CBDT) under a special Circular.
TDS under Section 192 is required to be calculated on the basis of the prevalent rates of income-tax on the estimated salary income and is required to be deducted on a proportionate basis at the time of each payment. For the said purpose the employer is required to consider various exemptions and deductions as prescribed under the Circular while computing the actual amount of income-tax to be deducted. (more…)
