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April 28, 2000

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"Is training allowance taxable?"

The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask.

My total taxable income is above Rs 3,00,000. I had been abroad for two months and saved some money. Is this amount taxable? Since my trip was late in the financial year, I did not mention these savings in my Form 16.

— Sarath

Since you were out of the country during FY 1999-2000 for two months, you are an Ordinarily Resident person for the purposes of Income-tax Act. As a result, your global income would be taxable in India. Thus, the money received by you abroad would also be taxable in India. The slabs for taxation of individuals are:
On the first Rs 50,000 of the taxable income: NIL
On the next Rs 10,000 of taxable income: 10 per cent
On the next Rs 90,000 of taxable income: 20 per cent
And on the balance of taxable income: 30 per cent
In addition, surcharge of 10 per cent will be leviable on the total tax liability.

Is any training allowance is taxable?

— Sandeep Jadhav

Yes, there is no specific exemption available for training allowance or stipend. It would be taxable under the head "Salaries".

I am a government employee. Part of salary and HRA for February was given to me with the salary of April, 1999. My initial increments were fixed on November 1999. Also, I received DA arrears of the previous year in April, 1999. But my all the income including the heads related to the previous year was used to calculate my income tax and deduced from my salary. How can I claim the refund of this? Will delay in refund incur an interest payment?

—Ravi Kumar Kodwani

It seems to me that what your employer has done is to tax the entire arrears and increment for the two months of February and March 1999 in the next year i.e. year ended 31st March, 2000. What you should do is find out from your employers whether they have computed the relief available to you under section 89 of the Income-tax Act read with Rule 21A of the Income-tax Rules. If they have not done so, you should yourself claim the relief while filing your Return of Income for the year ended 31st March, 2000. This might result in a refund being due to you.

What are the benefits a senior citizen would get with respect to capital gains tax (short term and long term)? What is the difference between capital gains of equity shares and that of mutual funds? Till recently, I was residing in a rented house and used to produce rent paid receipts for my HRA exemption. Now I live with my mother in her house. I have the option for self-lease i.e. my company will pay cheque monthly to my mother equivalent to my HRA amount. What are the advantages I get? How will it affect my mother who is a housewife?.

— B K Raghavendra

  • A senior citizen is entitled to a rebate of 100 per cent of the tax subject to a maximum of Rs 10,000 from the total tax payable by him/her on the total income for the year (including long term capital gains and short term capital gains). In the Budget for 2000-2001, it has been proposed that the maximum amount of rebate will be increased to Rs. 15,000 with effect from the year ended March 31, 2001.
  • If your employer gives rent to your mother, to that extent your salary income gets reduced. However, the value of perquisite in respect of the unfurnished rent-free accommodation as computed under Rule 3 of the Income-tax Rules will be included in your salary.
  • The value of this perquisite is generally taken at the rate of 10 per cent of the salary (which includes all taxable allowances and perquisites, bonus and commission).
  • Of course, the rent paid to your mother will be treated as her Income from House Property and would be added to her other income. If the total income is above the taxable limit then she would have to pay tax thereon.
  • In the absence of adequate information in your query, it is not possible to give a specific reply. However, basically, the definitions of Short Term Capital Asset and Long Term Capital Asset are such that shares of companies and units of mutual funds are at par. Thus, if shares or units are held for more than 36 months then they are Long Term Capital Assets and gains on transfer of such assets would be taxable as Long Term Capital Gains.

I have only three daughters. Can I form a HUF?

— Prabhat Kishanpuria

For starting an H.U.F., at least two male members are required. Thus, in your case, it will not be possible to start an H.U.F.

I have taken a housing loan from a financial institution. I get an interest subsidy of Rs 18,000 per annum from my organisation towards the interest paid on housing loan. As per Andra Pradesh HC ruling interest subsidy received from an employer is not a taxable income in AP. However, in Maharashtra it is a taxable income. Since income tax rules are applicable for all across the country, can you please clarify how two different states of the same country can have two different treatments as stated above.

— Thomas U

The general law is that a decision given by a jurisdictional court is binding on people living in that state. Thus, for example, a decision of the Bombay High Court would be of binding nature in the state of Maharashtra. The Income-tax Department of A.P. would, in view of the contrary decision of the A.P. High Court, not rely on a decision of the Bombay High Court in the matter mentioned by you. This is the reason behind different treatments being given by different courts. Till such time as a final decision of the Supreme Court is delivered on the matter, such conflicting decisions would continue to be given.

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