Is gift tax exemption allowed for half brothers and half sisters( with only father or mother common) and their spouses, like full brothers and sisters( with same father and mother)?
RE:Gift tax exemption
by Amitabh on May 03, 2007 07:13 AM
Ahmed,it's amazing how such questions come in your mind ! Well,the law cannot provide for everything.In such grey areas,it is better to claim the exemption and go in appeal if the department contests.
What is this Fuel & Maintainance option, using which an employee can save Income tax up to 150000 ( deduct FBT of 10%)if I am having a car registered on my name and car capacity is more than 1000CC.
Please provide the details under whcih section an employee can avail this facility.
We are 4 bro & sis. Our house was in my mother's name. Our father died earlier. Our mother did not make any will. After 5 years of mother's death, now we all want to sell the property and share it equally. My query is - the money I get (around 4 lacs) will be taxable? If so how much & how shall I calculate the same. Also is their any way I can save the tax, if any, legally. I am salaried person in tax bracket of 30%. Thanks in advance
RE:Sale of inherited property
by Amitabh on May 03, 2007 10:44 AM
In such cases,as you have inherited the house from your mother and she in turn has inherited the house from your father,the cost to the father will be treated as the cost of the house for the purpose of computing long term capital gain.If the house bacame the property of your father before 01.04.1981,you have the option to put the fair value of the house on 01.04.1981 as the cost of the house and multiply the same with the cost inflation index of the current year divided by the cost inflation index for 1981.This will give the cost of acquisition.Sale proceeds less cost of acquisition will be the capital gain.Any cost incurred on improvement of the house later will also be similarly indexed and added to the cost of the house.This capital gain will be taxed at the flat rate of 20 %.It will be taxed in the hands of the person who is the registered owner of the hosue,or in the hands of HUF,if any formed,consisting of the brothers and sisters or if all are co-owners,in the hands of each co-owner on his/her share.You can save this tax by investing the capital gain in another house within specified period as per Sec 54 or invest the proceeds in specified bonds as per Sec 54EC,your capital gain will be exempt.
RE:Sale of inherited property
by Goutam Paul on May 03, 2007 04:49 PM
Thank u very much..it is really helpfull, but only one thing i could not understand that "option of putting the fair value of the house on 01.04.1981". can u please elaborate this.Also in which site shall i get "Cost Inflation Index". Thanks again. Goutam
RE:Sale of inherited property
by Amitabh on May 03, 2007 07:24 PM
Look,capital gain is computed by deducting the cost of acquisition from the sale proceeds of the asset.If the asset is purchased/constructed by the assessee (your father in your case) before 01.04.1981,then instead of taking the actual cost as cost of acquisition,you may take the fair market value on 01.04.1981 as the cost.This may make the cost of acquisition higher and so capital gain will be lower.The cost inflation index for 1981-82 is 100 and that for 2005-06 is 497.If the house was aquired by your father after 1981-82 or if any of you have made any improvement after 01.04.1981,you will need the cost inflation index of that year when the house was acquired by your father or when the improvements were made,as well to act as denominator.The following are the cost inflation index notified by the government. 1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-2000 389
2000-2001 406
2001-2002 426
2002-2003 447
2003-2004 463
2004-2005 480
2005-2006 497 The index after this is not known so far.Can be checked once it is notified.Or you may ask on this very forum after some more time.
I'm a central government employee. I'm on deputation outside India for 3-months. During these 3-months I get subsistence allowance per month from the organization where I'm deputed. Does this income is taxable when I return back to India?
RE:Tax on Subsistence Allowance paid outside India
by Amitabh on May 02, 2007 04:06 PM
The allowance being given to you is not being given by the government,so the advantage of Sec 10 (7) cannot be taken.It is being given by the organisation you are working for.Sec 10(14) also exempts certain allowances to the extent they are used for the specific purposes for which they are given like conveyance allowance,daily allowance on tour,uniform allownace,professional updation allowance,etc.he list of such allowances are given in rule 2BB.But this allownace is not mentioned there.So it is taxable.More so because you have gone there for only three months so you are Indian resident.If this allowance is also being taxed in the country where you are earning it,you can take advantage of the double taxation avoidance agreement if any exists between India and that country,or if not,you can get relief under Sec 91,which provides for the unilateral relief for doubly taxed incomes where no DTAA exists.The relief will be the tax calculated at this income at the Indian rate or the rate in the country where it is earned,whichever is lower.More comments on such typical questions are welcome.
RE:Tax on Subsistence Allowance paid outside India
by Deepak Patel on May 03, 2007 03:20 PM
From Rule 2BB: "any allowance granted for encouraging the academic, research and training pursuits in educational and research institutions" What does this means? I'm also deputed to research organization outside India, and doing research there. Is still my income taxable?
RE:Tax on Subsistence Allowance paid outside India
by Amitabh on May 03, 2007 05:23 PM
If you are not a resident of India,your income earned and received outside India is anyway not taxable in India.This allowance under rule 2BB means any allownace granted for academic,research,training etc given by a suitable name indicating the purpose is exempt from tax to the extent it is actually being used for the purpose.If from my general salary I spend some amount for this purpose,I wont get any exemption.
I am a NRI living in Dubai. I have certain income in India like rent, fixed deposit interest etc. I have a NRO account in which I deposit all my earning in India. Are the normal income tax exemption limit of Rs 100000 applicable to me if I file a IT return. Can I also claim the other deduction like LIC premium, NSC etc?
RE:Income generated in India for a NRI
by Amitabh on Apr 30, 2007 10:06 AM
Yes,the normal exemption limit will be applicable to you.Also you will get deduction for your investments under Sec 80C as well.It is available to any assessee,being an individual or HUF.There is no restriction as to the residential status.
RE:Income generated in India for a NRI
by Amitabh on Apr 30, 2007 10:10 AM
I would like to add one small thing here.Though there is no restriction under Sec 80C as to the residential status of the assessee,it may be that the investments under certain schemes may not be made by a non resident.If that be the case,it will be mentioned in the rules of that particular investment scheme itself.
RE:Gift to relatives....Is that to help me anywhere
by Amitabh on Apr 30, 2007 09:46 AM
No,you do not get any deduction by giving any gift to a relative.If your income is otherwise taxable,you have to pay your tax first and then out of net receipts only can you give a gift.Your relative may not be taxed on the amount you are giving the gift but there will not be any difference in your tax liability.In fact if you give a gift to your spouse or minor child,the income therefrom,if any,will be clubbed in your hands and will be taxed as your income.
RE:Gift to relatives....Is that to help me anywhere
by Ahmed Ali on Apr 30, 2007 10:34 PM
The recepient has to pay tax on the gift received(with certain exceptions).It may be alright if both doner and receipient are in India, that way only one person pays the tax(as this is not deductible for the donor). What if the donor is in a foreign country(U.S.), this is not deductible for the donor, so thaey have to pay tax. Is it still taxable for the receipient in India? as one party has already paid tax on this amount. Otherwise it amounts to double taxation, it is not fair.
RE:Gift to relatives....Is that to help me anywhere
by Amitabh on May 01, 2007 09:46 AM
No,Ahmed.It is not like that.You see,if I earn some income and pay tax on it and thereafter I give a gift to you.Then it becomes your income,isnt't it ? You are not my relative.My earning an income and taxability of that income and my giving of gift to a relative or non relative and the taxability of that amount in the hands of recepient are two entirely different issues.The question of double taxation would arise if the same income is taxed twice in the same hands.If I receive something,I will have to pay tax on it,if the law so requires.If I give a gift out of that income,the gift will become the recepient's income and whether it will be taxed in his hands or not again depends on the law.Whether I am a relative of the recepient and whether the amount received by the recepient overall excedds Rs 50,000 or not.And yes,one thing has to be very clear-there is no reduction in the tax liability of the donor by giving any gift,never.It is immaterial whether the amount is exempt in the hands of recepient or not.
