From the FY 2016-17 onwards I contribute u/s 80 CCC Rs 1,50,000 every year to reduce my taxable income and also one year I contributed Rs 5,00,000 as SCSS 2004. Is it mandatory to show interest of these amts into my income every year. If one does NSC in Post Office you need not show interest into taxable amount. Your comments please.
n It is mandatory to disclose income received from these investments. If they are taxable, they should be included in your income for computation of tax liability. If they are exempt, then the same needs to be still disclosed as exempt income. Interest from NSC is taxable and accordingly, the same needs to be included in your income for computation of tax liability every year on accrual basis and not at the time of maturity.
I am partner in a partnership firm. My share in loss of firm is Rs 2,40,000. Can I off set this loss against my other income which is around Rs 10 lakh?
n Share in the profit of partnership firm is exempt u/s 10(2A) of Income Tax Act as the same is taxed in the hands of firm. Similarly a partner cannot set off his share in loss to reduce his other income.
I have given a plot of land to a mining company to stack mining ore. I am getting annual rent of Rs 6 lakh. Can I claim deduction of 30% from this rent as in the case of house property income ?
— Vishwanath J Gawde, Sanvordem
n Since the plot does not form part and parcel of any building, the rent received from such vacant plot is not taxable as ‘Income from House property’ but as ‘income from other sources’ chargeable to tax u/s 56. In view of this you will not be able to claim deduction of 30% from plot rent as in the case of house property rent.
I am carrying on business. I have taken bank overdraft of Rs 20 lakh on security of stock in trade. This amount is used by me for wedding of my daughter and interest on same is claimed as business expenditure in my books. Will there be any problem with Tax Authorities.?
n You are not eligible to claim this expenditure on interest as deduction, as it is not incurred for the purpose of your business. Apart from tax on this amount, you can be liable for penalty as high as 300%.
I am an Australian citizen of Goan origin holding OCI card. I have inherited huge property in Goa from my grand-mother as her legal heir. I wish to give this property to a builder for development. What compliances do I have to do under Reserve Bank of India regulations and under Indian Income Tax Laws?
n An OCI (PIO) can inherit any immovable property in India. He is also permitted to sell this immovable property other than agricultural and plantation or farm to a person resident in India in accordance with FEMA rules. However, he can sell any agricultural land, to Indian national resident in India only. In view of above you will not be required to take any prior permission from RBI. Under Income Tax Act, the sale of property to builder will attract long term capital gains tax of 20% after considering cost inflation index based on market price of this property as on April 1, 2001.
I have sold my shop used for business for which I had claimed depreciation from business income and have made profit of Rs 50 lakh. How will this profit will be treated for income tax?
n The surplus from sale price less depreciated cost will be treated as short term capital gain and will be liable for tax at normal income tax rates u/s 50. However, if you have held the shop more than 24 months, you can get exemption from the surplus Rs 50 lakh if invested either in Rural Electric or National Highway Bonds within 6 months from the date of sale. This is supported by Supreme Court decision in CIT vs V S Dempo & Co Ltd (2016) 387 ITR 354.
I have a PAN issued by Income Tax Department. My income from all sources is well below the taxable limit of Rs 2,50,000. Am I required to file income tax returns?
n An Individual is required to file returns under the provisions of Section 139 of I-T Act, 1961 if the taxable income exceeds basic exemption limit. Since your income is below the taxable limit you need not file tax return even though you are holding PAN. However, it is advisable to keep records of your taxable income to reply in case any communication is received from Tax department for non filing of tax return. However, if you expect your income to exceed taxable limits in near future it is advisable to file tax returns for continuity.