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JANUARY 24, 2000
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"Can I gift shares to my daughter on her wedding without any tax liability?"The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask. Chartered Accountants from Ganesh Jagadeesh & Co are here to remove all your doubts. I am an engineer working in a private company. I plan to invest upto Rs 60,000 in public provident fund (PPF), unit linked insurance policy (ULIP) etc. I also have an LIC policy and Mediclaim. Can I claim income tax rebate on the premium paid for these policies even when I have made a complete investment of Rs 60,000 in above mentioned schemes?
— Sitendra Soni The rebate under section 88 of the Income Tax Act, 1961, is 20 per cent of the amount invested subject to a maximum investment of Rs 70,000 (including Rs 10,000 which has to be invested in shares, debentures, or units of infrastructure sector companies). Hence the rebate on the above investment would be a maximum of Rs 14,000 (including Rs 2,000 additional rebate for investment in shares, debentures of, or units of infrastructure sector).
I have filed my Income Tax returns during 1998 June for Assessment year 1998-99. At that time, I did not have a permanent account number and I filed my returns without it. But I have to receive a refund in respect of conveyance Allowance benefit extended from August 1, 1997. So far I have not yet received the refund. I have also misplaced my acknowledgment slip. How can I follow up? Is there any time limit after which the refund lapses? If the residential address is changed, is the department bound to send the order to the employer's address? — C V Prahlad Rao The Income Tax department maintains a register wherein all the returns filed on a particular day are entered along with the serial number of the acknowledgment, name of the assessee etc. Since your IT acknowledgment has been misplaced, you can go to the concerned ward office where your return has been filed and based on the date of filing your returns, you can identify the serial number of your acknowledgment from the register. You can follow up your refund queries with the concerned authority by quoting the serial number of your return.
I would like to know how indexation works, how the Cost Inflation Index is calculated and how indexation benefit reduces Capital Gains Tax? — S Panchamukhi The benefit of indexation is that it takes into account the inflation that has taken place between the date of acquisition of the asset and the date on which the said asset is sold. As a result while calculating the capital gain, the indexed cost reduces the net gain which is chargeable to capital gain tax. The cost inflation index is published every year by the government considering 75 per cent increase of average rise in the consumer price index for urban non-manual employees for that year. My father aged 74 sold one land in our village for Rs 10 lakh which he had bought for Rs 5000. If he gifts it to me then can I form a Hindu Undivided Family (HUF)? — Mahesh Wadhwa An HUF cannot be formed by gifting a sum to it. This would attract the clubbing provisions contained in section 64 (2) of the Income Tax Act, 1961 and the income arising from it would be taxed in the hands of the individual.
I am in the highest income bracket and am already availing of the following benefits for tax deductions. I am 44 years old.
— S Ramani Your understanding of the Jeevan Suraksha scheme is absolutely correct. In addition to the Rs 60,000 claimed by you under section 88, you are eligible for an additional rebate of 20 per cent on the amount invested by you in approved infrastructure bonds. This additional investment is however limited to Rs 10,000. However, the question regarding advantage and returns are not related to personal taxation and cannot be answered. How do I gift shares to my wife and/or major daughters with no or minimum tax liability on me? Is there any other alternative to transfer my share capital to either my wife or major daughters without any tax liability on me? One of my daughters is getting married soon. Can I use this opportunity to transfer capital? — Anil Lilwa Under the clubbing provisions of Section 64 of the Income Tax Act, 1961, transfer of assets to spouse for inadequate consideration or otherwise than for an agreement to live apart would attract the clubbing provisions.
Can interest on National Savings Certificate (NSC) be included as interest on government securities to claim additional exemption of Rs 3,000? — Amirali Charania No. It cannot be claimed as an additional deduction under section 80L of the Income Tax Act, 1961. Between April 1999 and now, I have made the following capital transactions:
— Shaunak Kashyap There is a mistake in your question. You have written that the long term gain on sale of shares is Rs 10,000 with an indexed purchase cost of Rs 330,000 and sale at Rs 360,000. The capital gain should be Rs 30,000 or the indexed purchase cost should be Rs 350,000 or sale price should be Rs 340,000.
EARLIER Q&AS: 'How can I prevent tax deduction at source on company and bank fixed deposits?' 'How do I file tax returns if the original Form 16 is lost in transit?' 'Is income from moonlighting for a foreign firm taxable?' 'How much deductions can I claim out of the House Rent Allowance that I receive from my company?' Is PAN a must even if I am not paying income tax? What are the possible ways of planning my tax payments using the Hindu Undivided Family status?
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