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

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…)

PPF INVESTMENT NOW MORE ATTRACTIVE!

PPF’s tax saving bonanza gets much bigger with investment raised to Rs.1 lakh & interest to 8.6% p.a.!

A PPF investor, who could earlier invest only Rs.70,000 in a financial year, would now no longer be required to scout around for other avenues of savings, investments or allocations for availing the full benefit of deduction of Rs.1,00,000 under Section 80C. His long time prayer has finally come to be answered with the Central Government declaring the hike for annual investment in PPF from Rs.70,000 to Rs.1,00,000. This happy announcement on11-11-11was coupled with added joy with the assurance of a higher annual return of 8.6% on PPF accounts, as against the current 8% per annum. (more…)

GAINS TAX CONCESSIONS FOR AGRICULTURAL LAND

Capital gains arising on sale of a rural agricultural land & on compulsory acquisition of an urban land are fully tax exempt!

      Section 2(14) of the Income-tax Act, which defines ‘capital asset,’ excludes from within its purview an agricultural land situated in India at a place having a population of less than 10,000 as per the last preceding census or at an area not comprised within any municipal limits or within a notified distance from such municipal limits. The Government notification in this regard has specified distances ranging between 2 to 8 kms for various towns situated in different states keeping in view the extent of urban development in the respective areas.

      If the agricultural land sold by a taxpayer does not qualify as a ‘capital asset’ on the basis of the above test, then it does not give rise to any taxable capital gains. Any agricultural land situated in any ‘urban area’ on the basis of the above guidelines being required to be treated as a ‘capital asset,’ any gains arising from the transfer of the same would be liable to tax as capital gains. (more…)

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