Source:Tax guru
The new Cost Indexation Index has been announced -- and taxpayers with long-term capital gains will benefit!
For example if you bought a capital asset in 1981 for Rs 1 lakh and are now selling it for Rs 10 lakh, the normal course, you would earn a profit of Rs 9 lakh. But as per the new cost inflation index, the cost will be taken as Rs 5.51 lakh instead of Rs 1 lakh to arrive at the value of capital gains.
Similarly, the benefit of cost inflation index will also be given to someone who has received a property in inheritance or gift.
Can we make a trust in the name of God and claim tax benefit? Who will qualify for trusteeship?
Yes, you can make a file under God's name as per the income tax rules. It is possible legally. As far as trusteeship is concerned, you can nominate anyone within or outside the family as trustees. Trust can be in the name of any deity and one can apply for the PAN card in that name.
If an employee withdraws Provident Fund from the company account after leaving the job, will the income be taxable?
Sandeep, Chandigarh
It will be, if you work for less than five years for a company, and decide to leave the job. If you withdraw money from PF, you have to pay income tax. However, there is an exception if you have been taken ill or your employer closes his or her business. In these cases, the employee can withdraw money in less than five years. Again, no income tax will be charged if you transfer your PF to the new employer on leaving the job with the first employer before five years.
How is tax calculated on a split share?
Sajjid Tamboli, Kohlapur
If a company splits the stock and gives it to the investor, he/ she pays no income tax. At the time of sale of shares, subtract cost price from the sale price.
My housing society is willing to get the flats redeveloped by a developer. Will the money that a flat owner receives from the developer, be taxed?
Madan Raheja, Surat
Yes. The builder has paid you for shunning your ownership rights of the flat. The capital gains incurred therefore will be taxed.
How is TDS deducted from the salary if an employee claims house loss along with HRA? The employee has given his house on rent. And if the property is not in Hyderabad, will it qualify for TDS?
Prakash Agrawal, Hyderabad
At the time of deducting TDS of an employee, the employer has to deduct the loss of house property from the salary. Even if the rental is less and the loss of property more, owing to high rate of interest on home loan, the loss will be adjusted against your salary income.
The employer will cut TDS after adjusting the loss against your salary. For example, Rs 6 lakh (salary) - Rs 2 lakh (loss of house property given on rent) = Rs 4 lakh (net taxable income). Now the income tax will be calculated on the net taxable income, irrespective of the location of the property. So, the employer can give employee the benefit.
Will I get tax deduction if I invest in Bima Plus plan of the LIC?
Surinder Kumar Chandel, Sawai Madhopur, Rajasthan
If you invest in a life insurance policy, the premium will get you a tax deduction under 80C of the IT Act. In a pension plan, the deduction is given under 80CC. One can invest up to Rs one lakh tax-free. If you invest in a pension plan and you get the payment later on, income tax will be applicable on it. On the other hand, if you pay an insurance premium, you pay tax on the amount you get on maturity of a life insurance policy from the insurance company.
Is interest on post office savings tax-exempt?
PK Kedia, Ludhiana
Except for savings account, income tax will be applicable on all sorts of income, whether it is cumulative, kisan vikas patra or monthly income plan.
Will I get a tax concession for a second home?
Sanjay Verma, Delhi
You are entitled to a maximum exemption benefit of Rs 1.5 lakh on one house property. However, if want to purchase more than one house and give the residential house on rent, you will get exemption on the interest amount. But if the second house is for self-occupation, then there is no tax-exemption.
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