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

SACHIN SCORED TAX BREAKS TOO!

When ITAT held Tendulkar’s income from modeling & TV commercials, as that of an artist, exempt from Income-tax!

“VISA Power… Go get it!”… Millions who have seen Sachin on TV commercials will never forget these lines of the master blaster, which rolled on screen for almost six long years. But perhaps very few know the interesting tax tale behind it.

During Assessment Years 2001-02 to 2004-05 Tendulkar received an amount of Rs.20 crores as gross receipts from sports sponsorship and advertisements, which included an amount of Rs.6 crores received in convertible foreign exchange from VISA, ESPN Star Sports and Pepsico. Sachin claimed deduction under Section 80RR of the Income-tax Act in respect of the amount received in foreign exchange, on the ground that the said income had been received by him from the exercise of his profession as an ‘actor.’

The Assessing Officer rejected the claim of deduction under section 80RR on the ground that the taxpayer was a professional cricketer and the income from modeling and advertising was not derived by him from the exercise of his profession. According to the Assessing Officer, by endorsing any products in advertisements, the taxpayer did not become a person whose profession was acting. On appeal, the Commissioner (Appeals) confirmed the action of the Assessing Officer on the ground that by profession the taxpayer was neither an ‘actor nor an artist.’ The activity of appearing in advertisement or commercial, etc. could not be equated with that of an actor or artist and this activity was subsidiary activity of the taxpayer and was also not directly related to his profession of playing cricket. Therefore, any subsidiary activity, which was not directly related to the specific profession, could not be considered for deduction under Section 80RR. (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…)

PPF MAGIC UNSTOPPABLE!

You Can Build Amazing Tax Free Capital

For Your Children Via Investment In PPF!

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Housing Interest evokes Evergreen Interest!

Deduct Now, Pay Later, But Save Tax For Sure!

Deduction of interest on housing loan has been of evergreen interest for readers since it provide focus on valuable opportunities for income-tax saving. Replies to the following queries provide an interesting insight.

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Tax Axe To Chop Charities Too!

Religion & Politics Sheltered As Taxman’s Holy Cow!

Complex Provisions To Perplex Charities

New Jargon – Fresh Norms

  •  Charitable trust to bear the new identity of ‘Non-Profit Organisation (NPO).’  
  • Charitable purpose replaced by the new phrase ‘permitted welfare activity (PWA).’ 
  • Fresh procedure for NPO registration to be undertaken by all charities. 
  • Different & elaborate norms for computing gross receipts and outgoings. 
  • Current benefits of accumulation of income, upto 15% for an indefinite period, and upto any amount for five years, not available under DTC. 
  • Deduction at specified rates (mostly 50%) to be allowed to donors of eligible NPOs. 

15% Tax on eligible NPOs – 30% Tax on other Charities

  • No more tax exemption for income of charities. Even current basic exemption upto Rs.1,60,000 not applicable under DTC. 
  • Taxable surplus of all eligible NPOs (fulfilling as many as 14 prescribed conditions) to be taxed at flat 15%.  
  • All other trusts, though doing charitable work, to attract flat 30% tax on their income as an AOP. 

Several Current Charities may not qualify as eligible NPOs

  • Specific community trusts and associations for benefit of their members, though currently eligible for exemptions as charities, not eligible to be registered as NPOs under DTC. 
  • Where any business (not incidental to PWA) is held under the charity, even though its business income is applied only for PWA.

(more…)

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