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HOME | PERSONAL FINANCE | TAX |
May 31, 2000
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"Is the rebate on 88C on net or gross salary?"The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask. My friend keeps talking about the number of files they have in the family and how new files keep getting created every now and then. Their family is into business. I and my husband are salaried individuals. I would like to know what exactly do these files mean, how they are created and is there any tax advantage in it?
— Manjula Radhakrishnan
Every person who has income above the non-taxable limit are subject to tax. Such persons are refereed to as an assessee under the Income Tax Act, 1961. As you have rightly observed, with a new addition in the family, the child receives gift that may be in cash or other monetary instruments. Such capital build up also leads to the creation of file in the name of the new member. However, such transactions come under the scrutiny of Income Tax Officers by virtue of the various provisions contained in the Act. However, such capital build up is done generally with a long term perspective that can be utilised once the child attains the age of majority. Apart from the above there are no other Legal advantages/benefits. I receive a monthly pension of Rs 6,400 through LIC with whom my employer had an employees' superanuation scheme. Is this entire amount taxable?
— P M Unnikrishnan Uncommuted pension as received by you on monthly basis is taxable under the head salary. Recently, my father has sold a piece of agricultural land which he inherited. He retired from service 15 years back and does not get any pension. Now he wants to invest this amount to get some regular income. What are the best options ? Is it essential to invest this under section 54EA or 54EB ? What forms need to be submitted to declare that he has no other source of income ?
— Mukund Capital gains tax is attracted when a capital asset is sold/transferred during the year by the assessee. The term capital asset does not cover agricultural land in India which is not situated:
Your father would be eligible for deduction u/s 54B if he had invested the net consideration in another agricultural land. However, as the criteria being getting regular returns on the investment, you have two courses of action ahead of you:
I am a software professional living in Delhi in rented apartment. My monthly income is Rs 16,500. Which are the various allowances that will help me reduce the income tax liability?
— Ahamad Alisha The structure of your salary depends primarily on your Company's policy. However, we have tried to provide you with some allowances that can be claimed as non-taxable.
In the assessment year 1995-96 I had purchased land in Delhi for Rs 125,000. In the current assessment year of 2000-01, I sold the above land for Rs 200,000 and purchased a residential flat jointly with my wife for Rs 660,000, out of which 400,000 is from a bank housing loan and the balance of Rs 260,000 is contributed equally by me and my wife ( she being has her own sources of income and an income tax assessee). Kindly advise me on my capital gain tax liability and modes of saving tax. I fall in the 30 per cent tax bracket.
— Vinay Gupta Based on the information provided by you, we presume that the land is a capital asset liable to capital gains tax and that it is a long-term asset. Assuming there are no cost of improvement or other costs to be considered, the capital gains would work out as follows:
How is the additional rebate of Rs 5,000 to be accounted to women employees? If the total tax of a women employee during the year works out to Rs 25,000 (without surcharge) her tax liability will be Rs 20,000 + surcharge. Or does this additional rebate of Rs 5,000 mean that she has to make additional investments (like investments under sec 88). — S Poornalingam
Can you tell me about the the redate allowed under section 88C for women employees. The maximum salary which would be exempt from tax and also if it is the net or the gross salary which is taken as the basis for calcualtion of the exemption amount.
— Anuradha The rebate u/s 88C is available to women is allowed from the tax liability before surcharge. But, the following two conditions must be satisfied:
SITUATION 1 Net taxable salary for the year: Rs 85,000 Tax on total income: Rs 6,000 Rebate under section 88C: Rs 5,000 Net tax: Rs 1,000 Surcharge @10 per cent: Rs 100 Total tax payable: Rs 1,100
SITUATION 1 I am a salaried resident individual and have a mentally retarded child of about 12 years age.
I am told I can get deduction for a minimum amount of Rs 40,000 in respect of maintenance and medical treatment under Section 80DD of IT Act. Is this amount allowed only on production of bills? If it is on actuals then can I also include the transportation charges incurred to take him for physiotherapy treatment.
— Raj Gurrapadi Section 80DD currently provides for the deduction of Rs 40,000 in respect of maintenance including medical treatment of handicapped dependents. The amount allowed is subject to few conditions:
I want to clarify which is the depreciation on forklift for handling the material.
— Ashok Forklift for handling material is covered under the block Plant and Machinery and the relevant rate of depreciation under the IT Act, 1961 is 25 per cent. I have an apartment and intend to buy another which would be ready by 2002 December. I plan to finance this purchase by selling my existing apartment and taking a housing loan. I need to know the capital gains liability.
— N Mathawale
As you are planning to invest the entire net sale consideration in the new house you could take benefit of deduction u/s 54 of the I.T. Act, 1961, whereby your entire capital gains tax would be exempted.
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