Can LTC can be claimed by Public limited company director for visiting Overseas country ?

As per Section 10(5) read with Rule 2B of the IT Act, it permits exemption only if travel is within India. However, sometimes people plan their foreign travel having two Indian cities en-route their foreign destination and claim travel to the Indian destination. This practice has always been a grey area difficult to take a call.. However, in a recent judgment by the Chandigarh Tribunal, it has been clarified that the concession is available only for domestic travel and cannot be clubbed with an overseas journey. In this case, the individual had travelled overseas and the tribunal denied the tax benefit on the total cost/partial Indian travel cost. How ever, let us rely on section 10(5) of the act read with Rule 2B and decide accordingly.


Consulting fees as Salary ?

Question :
I’m a software engineer by profession and I left my job in Feb 2017 and started trading in F&O from April this year. However, after 6 months of heavy loss I stopped doing F&O trading. I was approached by a startup to consult for a project with an agreement that I would be paid a consulting fees if they win the project. The company has won the project and they have also offered me a job which I’m going to start from January 2018. They’ve offered to pay my consulting fees as bonus or salary if I so choose.
My income/loss details are as follows:
Income from F&O: – 5 lakh (Turnover: 24 lakh)
Consultancy Income: 10 lakh (Can be taken as salary/bonus)
Income from salary: 8.6 lakh
My income so far for this year has been 0 and all income will come in the last 3 months of the financial year. So my questions are:
1) Is it better to take the consulting fees as salary? As a consultant I can show various expenses like internet bill, phone bills etc. However, do I need a GST registration since my turnover from F&O has already crossed 20 lakh? Does F&O turnover come into consideration when calculating the turnover threshold for registering for GST? If GST registration is needed then I’ll also have to charge and pay a 18% GST which I would prefer to avoid if possible.
2) I’ve not paid any advance tax so far as I was not sure of any income. If I pay advance tax now I understand there will be penalty and interest charges. Is there a provision of rebate in that as I was truly not sure of any income for the year.

Answer :
F & O Loss cant be offset against Salary Income. So given option between Salary / Consultancy you can opt for Consultancy which will be more tax efficient. With regard to GST though Equity trades doesnot comes under GST still it crosses limit of 20 lacs. GST is charged on and above your Consultancy fees so you need to do a GSt Registration. As the Number of Invoice are only few , you can easily comply.
In case of Salary / Consultancy there will be withholding taxes ie TDS .. It should take care of tax liability. If you believe same will fall short you can pay advance tax with Interest.

Claiming HRA on joint ownership

Question :
I and mother jointly purchased a house in which TDS on the house is paid by her. I have to join to get the loan. Now loans are clear but my name is still there on the registry. We want to show it as she has taken some money from me and she will return it to me in future. Now can i claim HRA on this property by transferring amount to her as rent every month?

Answer :
You can gift your share in the home to your mother so that she can own 100% stake.
Just transferring the amount is not enough for proving rental payment. You may have to comply with several other norms, like register the agreement, collect receipts etc.
As per section 10(13A) of the Income Tax Act, 1961, an exemption is provided on house rent allowance (HRA) received by an employee, provided the employee lives in a rented accommodation and pays rent for the same. Therefore, if you are getting salary and in the salary structure, if you get HRA, then, you can certainly claim exemption under section 10(13A) for the HRA subject to the conditions and limits laid down in that section.

Gifts to Son in law & Daughter in law

Question :

a) Please advise whether I can gift Rs 50,000 each to my son-in-law and daughter-in-law in one day? If so, is there any tax liability on the donee or donor ?

b) What is probating of a will ?

Answer :

a) There would be no tax liability in respect of the amount gifted by you to your son-in-law and daughter-in-law as far as both these recipients are concerned. However, income earned on the amount gifted to your daughter-in-law will be included in your total income under the provisions of Section 64 sub-section (1) (vi) of the Act.

b) The probate of a will is a process whereby the will executed by a person is legally recognised to enable the beneficiaries become legal owner of the property in respect of which the will has been executed. It may also be defined as an official process approving that the will is valid.
Source : The Tribune/16.10.2017

Posted for employment abroad – Double taxation applicability

Question :
My son is working is an MNC posted in Bangalore. Now the company has posted him in Singapore by giving him fresh appointment. He will join the new job in Singapore by the end of October or November, 2017 in the same company. My query is what will be his tax liability in India and Singapore. Please also clarify whether dual taxation will be applicable or not ?

Answer :
Your son would be liable to pay income tax on his salary income for the financial year 2017-18 including income earned by him for the months of October/November 2017 to March 2018 received in Singapore. This is on account of the fact that your son would be resident in India for the financial year 2017-18. In case he becomes liable to pay tax in Singapore on his salary earned in that country, the amount of tax paid by him in Singapore can be claimed as a relief against the total tax payable in India by your son in respect of his income for the assessment year 2018-19 (financial year 2017-18). The relief is allowed only in respect of the tax payable on the income which is doubly taxed.

Source : The Tribune/16.10.2017

No rebate u/s 87A if total income exceeds Rs 5 lakh

Question :
I received in the FY 2015-16 a sum of Rs 7,20,000 in which Rs 1,16,000 belongs to arrears for the previous FY 2014-15. As a result, I am left with Rs 6,04,000 (Rs 7,20,000 minus Rs 1,16,000 arrears) for the FY 2015-16.
I have invested Rs 1,50,000 u/s 80C in the FY 2015-16. After taking into consideration Rs 1,50,000 and Rs 1,16,000, I am left with a sum of Rs 4,54,000 for this FY. My query is under these circumstances, am I eligible for the rebate of Rs 2,000 u/s 87A for the FY 2015-16 ?

Answer :
Your total income after claiming deduction allowable under Section 80C of the Income-tax Act 1961 (The Act) would be Rs 5,70,000. The rebate under Section 87A of the Act is allowable to an individual resident in India whose total income does not exceed Rs 5 lakh. You would, therefore, not be entitled to a rebate under Section 87A of the Act for the assessment year 2016-17 as your total income including arrears of salary would be more than Rs 5 lakh.

Source : The Tribune/16.10.2017

Tax Liability of Retirement Benefits.

Retirement savings plan is an essential part of the employees future financial security. Every employee must know about the various retirement benefits that he would be getting from his employer and their tax implication as well. Employees should understand and monitor their retirement plans and benefits. Retirement benefits received by an employee are taxable under the head Salary.
Here are some of the retirement benefits-

Pension Income-
Pension is the income received by an employee after his retirement on account of his past service. Taxability of pension depends on whether it is periodic (monthly) or lump-sum. Pension received in periodic payment is called as uncommuted pension which is fully taxable in case of government and non-government employees.

When a lump-sum payment is made in lieu of a periodical pension, it is termed as commuted pension. It is exempted for government employees. In case of other employees, if that employee is also receiving gratuity, then 1/3rd of the commuted pension would be exempt from tax otherwise, half of the commuted pension will be exempt from tax. Family pension received by family members after the death of employee shall be chargeable in the hands of recipient under the head “other sources”. Deduction of Rs. 15,000 or 1/3rd of such pension, whichever is lower shall be allowed.

Gratuity is a lump-sum payment made by an employer for the appreciation of the services rendered by his employee. Gratuity received is exempt u/s 10(10) Gratuity received by a government employee is completely exempt from tax. For other employees, the least of the following is exempt from tax
Amount actually received as gratuity,
Half month’s average salary for each completed year of service, or
Maximum limit of Rs. 10,00,000

Leave Encashment-
Leave encashment is the payment for encashment of unused leave of an employee. Encashment of leave during the employment is fully taxable. At the time of retirement, leave encashment received by government employee is fully exempt from tax. When received by non-government employees, the least of the following is exempt:
Leave encashment actually received,
10 months average salary,
Earned leaves entitlement not exceeding 30 days for every completed year of service, or Maximum limit of Rs. 3,00,000

Voluntary Retirement Compensation-
Benefits derived by an employee by opting Voluntary Retirement Scheme (VRS) can also be considered as retirement benefit. VRS is availed by employees having age of 40 years & completing 10 years of service. The amount of exemption is the actual amount of compensation received or Rs. 5,00,000, whichever is lower. The exemption is available to an employee only once.

Retrenchment Compensation-
Any compensation received at the time of retrenchment is exempt from tax to the extent of minimum of the following
Amount actually received,
Amount calculated based on 15 days average pay for every completed year of service or part thereof in excess of six months, or
Maximum limit of Rs. 5,00,000