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"What do I do if I have not received my PAN?"

The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask.

In view of the budget proposals for AY 2000-01, it is likely that retired individuals investors with a low annual income from investments and no salary income, may want to switch to the growth option of debt-oriented schemes of mutual funds from income option. Kindly elaborate the benefits of above, if any. Specifically explain:

1. Is the exemption limit of Rs 50,000 is applicable for income from long term capital gain?
2. Are section 88 benefits applicable for income from capital gains?
3. What are the TDS provisions?
4. Can a declaration be made in prescribed form to seek exemption from TDS as in the case of bank interest income?

— V S Save

1. The initial basic exemption of Rs 50,000 is available to all individual assessees. Thus, if you have only Long Term Capital amounting to say, Rs 60,000, then you will have to pay tax only on Rs 10,000 (i.e. Rs 60,000 minus Rs 50,000).
2. The rebate under section 88 is not available for tax payable on long term capital gains. However, if the capital gains is short term then it is taxable at the same rates as any other normal income and hence the rebate would be available from tax on such income.
3. DS is the short form for Tax Deducted at Source. Under the Income-tax Act, in respect of certain payments, the payer is required to deduct to tax at source before making such payment. Various rules and regulations govern the TDS provisions.
   If you have any specific query regarding TDS from a particular payment then please let me know. I will be pleased to reply to such a query. But in the absence of a specific query, it is not possible to give you the details of all the TDS provisions.
4. From your query, it is not clear as to the nature of payment to be received by you from which you seek to avoid TDS. Thus, it is not possible to reply to your query.

I had applied for PAN, two years ago, when I was working for my previous employer in Delhi. Recently, I moved to Bangalore. I have still not received my PAN till now. I have the copy of the application form that I had submitted and given back as an acknowledgement with seal. Whom can I get in touch with? I request you to please provide the address and contact numbers.

— Krishna

The problem faced by you is a very common one which thousands of Indians are facing today. The Income-tax Department is just not equipped to deal with the deluge of applications received by it for allotment of Permanent Account Numbers.
Since you had made an application while you were in service at New Delhi, the official letter intimating the PAN to you will be sent by the Income-tax Department to your New Delhi address. Now that you have moved to Bangalore, you will need to file your Income-tax Returns in Bangalore.
It would be advisable for you to write a letter to the PAN Cell, Bangalore, intimating to them the fact that you have already applied for the PAN at New Delhi and that now you are going to be assessed at Bangalore.
Attach a photocopy of the said application to the letter and request them to allot the number to you. You can get the address of the PAN Cell at Bangalore from the Public relations officer of the Income Tax Department in the main ITO at Bangalore.

How do I apply for a duplicate PAN Number. Before I left India 16 months ago, I applied and got a PAN through my earlier company. I lost the PAN when the (earlier company) sent it by post to my permanent address. Is there any way to find my pan number or apply for a duplicate PAN?

— Sathyamurthi Natarajan

In all cities, there is a central office in the Income-tax Department which is in charge of allotting the PAN. The records relating to this department are computerised. You should go to the PAN Cell in your city and ask them to check the data in their computers. They will be able to give you your PAN. In case you are in Mumbai, the address of the PAN Cell is :
Block C-13
Pratyaksha Kar Bhavan
Bandra Kurla Complex
Mumbai 400 051.

I newly joined an organisation in November 1999 with a basic salary of Rs 8,800. HRA & HRent India allowance, Medical and yearly befits/month total to Rs 10,000. How much tax do I have to deposit and how can I save? I have not made any investments till now.

— Munish Arora

For the purpose of calculating the taxable salary, it would be necessary to know the figure of the H.R.A. being received by you.
Also, for calculating the amount of exemption under section 10(13A) in respect of the HRA, the figure of rent actually paid by you would be required. Both these figures are not available in your query.
Further, the amount of Profession Tax deducted by your employer would also be required. Thus, it is not possible to give you the answer that you seek viz. the amount of tax payable by you on the salary earned by you.

In any case, please note that the responsibility for deducting tax at source from your salary is primarily that of your employer. Thus, the question of your "depositing" the tax on your salary does not arise. You would be required to pay the tax only if your employer fails to deduct the tax at source.

As regards the medical benefits, please note that reimbursement of medical expenses actually incurred by you would not be treated as a taxable perquisite in your hands subject to a maximum of Rs 15,000 per annum.
The Income-tax Department has been taking a stand that a fixed monthly allowance paid towards medical expenses is not the same as reimbursement of medical expenses. And so, it has been taxing such a fixed allowance as part of taxable salary. In short, medical benefits are tax free in your hands only if they form a reimbursement of actual expenses (which should be supported by medical bills).

The decision regarding which investment to make is dependant upon various factors such as your age, your other income, your outlook towards investments (type of returns, frequency of return, safety, liquidity etc.). None of these is available in your query and so it is not possible to reply to your query regarding how to save tax by investing.

I earn above XX lakh and hence cannot avail of standard deduction. I need to know the best ways to save tax besides the Rs 70,000 investment which includes Infrastructure bonds?

— Melissa Nazareth

I presume that you are a salaried person and are in the highest tax slab. You also seem to have made the full investment of Rs 70,000 eligible for rebate under section 88 of the Income-tax Act.
Over the course of past few years, the government has slowly been reducing the number of tax-free benefits/allowances available to tax-payers. Most of the allowances and benefits are taxable. This has now created a situation wherein many people have come to accept the reality that it is better to pay tax on your income rather than invite the taxman to your house for a survey or a raid.

In your case, I would suggest you look at the following options for saving tax legally:

• Payment of Mediclaim Insurance Premium (which is fully deductible from your salary income)
• Taking a loan from your employer at a concessional rate of interest (or at zero interest) and using the loan for your personal use
• Taking a housing loan and investing in a residential house property and taking advantage of the tax benefits available on the housing loan repayment and on the interest on such a housing loan
• Taking advantage of the exemption available in respect of House Rent Allowance under section 10(13A) by paying rent to the owner of the house in which you live (obviously, if you are living in your own house, you will not get this benefit) and taking part of your salary as House Rent Allowance

I am a software engineer working for a MNC in Bangalore. Recently, we were covered under the ESOP . I would like to know the tax implications of the ESOP. The industry talked of double taxation of ESOP, once when the options are elgible to be exercised and later at the time of sale of the shares.
I talked to a CA, but he gave a totally different version. The ESOP is subject to double taxation only if the Shares are offered at a discount to the market price. Otherwise the employee is taxed only at the time of sale of the shares at the rate of 44.5%. ( 10% Long Term Capital Gains Tax + 34.5% Perquisite Tax).
Please let us know the actual taxation scheme as per the Ministry of Finance Guidelines preferably with an example.

— Prasanna

The information given to you by the chartered accountant is correct. ESOPs are taxable as a perquisite only if they are offered to the employee at a discount as compared to the market rate prevailing as on the date of exercise of the offer by the concerned employee. If the offer price is more than or equal to the prevailing market price then there is no question of any perquisite.

When the shares are sold at a later date, what is taxed is the difference between the sale price and the cost to the employee.
If there has been a perquisite then the cost will be deemed to be the market value of the shares as on the date of the exercise of the option. If there was no perquisite then the cost at which the shares were acquired by the employee will be the relevant figure.
If the date of sale of the shares is more than 12 months after the date of allotment of the shares then they will be treated as long term capital gains and accordingly, the gains on the sale of such shares would be long term capital gains which would be taxable at a concessional rate of 10 per cent.

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