Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

‘SUGAM’ MAKES IT EASY FOR SMALL BUSINESS ENTITIES!

Enjoy Freedom from Accounting, Audit, Scrutiny & Advance Tax by declaring 8% or higher profits

              If you asked your neighbourhood grocer or panwala whether they were filing their tax returns, they would have immediately quipped, “Saab, hum ye sab accounts or scrutiny ke chakkar mein kyun pade?” The fear of maintaining accounts and being required to face tax scrutiny have been the biggest dampeners for small business entities who earn taxable incomes, but feel shy to come forward and get on the roll of India’s taxpayers, which currently is a meager 4% of the country’s total population

              Fortunately, the ‘Presumptive Income Scheme’ in force from Financial Year 2010-11, requiring the filing of the new tax return ‘Sugam’ from the current Assessment Year 2011-12 should happily resolve these concerns. (more…)

WATCH OUT GIFTS YOU RECEIVE!

Specified Gifts in Cash or Kind exceeding Rs.50,000 in value treated as your taxable income!

The scope of definition of ‘income’ u/s.2(24) was widened by the Finance Act, 2004 by providing that ‘income’ would also include any sum referred to in Section 56(2)(v). Section 56(2)(v) was introduced to provide that, “where any sum of money exceeding Rs.25,000 is received without consideration by an Individual or HUF from any person on or after the 1st September, 2004, the whole of such sum shall be chargeable to tax as Income from Other Sources.”

However, with effect from 1st April, 2006, it came to be provided vide Section 56(2)(vi) that such receipts from one or more persons aggregating to more than Rs.50,000 in a financial year shall be treated as income in the hands of the recipient individual or HUF. (more…)

TAX LIABILITY ON AGRICULTURAL LAND!

Total Exemption from Wealth Tax & Gains Tax Concessions subject to fulfillment of conditions

Today, we shall discuss two interesting Readers’ Queries on taxability of agricultural land under wealth tax and capital gains tax.

Query: I am holding a large piece of agricultural land situated just outside the limits of Ahmedabad Municipal Corporation (AMC). I have always been under the impression that agricultural land does not attract wealth-tax. However, my tax consultant says that this land being within the 8 kms range from AMC limit is ‘urban land’ within the meaning of the Wealth-tax Act and since its market value is more than Rs.30 lakhs (being the general exemption limit), it is liable to wealth-tax. Can you please guide me regarding my correct tax liability? (more…)

NO TAX HURDLE FOR INTEREST FREE LOANS!

Department cannot dispute a situation where a taxpayer uses his own capital as per his desire

Today, we shall discuss two interesting Readers’ Queries on tax implications of interest-free loans.

Query:  I had received Rs.40,00,000 as my retirement benefits in 2008.  Out of the same, I advanced interest free loans of Rs.15,00,000 to my wife and Rs.10,00,000 to my HUF.  They invested the same in Deposits with a firm earning interest at 12% per annum.  In my scrutiny assessment for Assessment Year 2009-10, my Assessing Officer has raised the issue that the interest income of Rs.1,80,000 earned by my wife and Rs.1,20,000 earned by my HUF is liable to be clubbed with my income.  He has proposed to invoke the provisions of Section 60 of the Income-tax Act alleging that this is a case of transfer of income where there is no transfer of assets.  Alternatively, he has proposed to tax in my hands notional interest income at 12% per annum on the interest free loans of Rs.25,00,000, on the ground that I have not earned interest which I could have so earned.  Kindly advise whether my Assessing Officer’s action is justified? (more…)

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