The Hindu Business Line : My sonny got a <B><I>gaadi </B></I>

MY MINOR son has won a car at a shopping festival. My wife had to pay for the TDS amount. I am not a taxpayer whereas my wife is. Can I get a PAN registration and get the car registered in my name and obtain the refund of the TDS? -- Anonymous, e-mail

No you can't. Income of a minor child is added to the income of its parent, father or mother, whoever has got a greater income otherwise. Since your wife apparently is having a greater income, the income in any case will be added to her income. I take it that the child did not win the prize by exercise of skill or talent of his. I am sure it must have been pursuant to draw of lots. That makes it a lottery income which, in any case, is taxable at the maximum marginal rate of 30 per cent plus surcharge. Therefore it matters very little in whose hands it is taxed.

HRA exemption

I LIVE in Chennai because I work there. I get HRA and live in a rented accommodation. I have constructed a house in Hyderabad with borrowed funds and my family lives therein. What are the tax implications? -- A. Narasimha Charlu, e-mail

You will get exemption on HRA to the extent permissible. Your house at Hyderabad will not be taxable provided that this is your only self-occupied house. Self-occupation does not mean one should occupy the house oneself. Occupation by dependants tantamounts to self-occupation. You can deduct interest up to a maximum of Rs 30,000 or Rs 1,50,000 depending on when you acquired the house, which would obviously throw up a loss from this house which you can set off against your salary income. You are also eligible for tax rebate under Section 88 on a maximum of Rs 20,000 towards repayment of principal of the borrowings.

Stay at project site

I WORK for a company at its project site. I have been given rent-free accommodation as well as free electricity by my employer. I understand rent-free accommodation given at project site is tax-free and, therefore, am at a loss to find my employer deducting tax on this perquisite from my salary. Please advise. -- Suresh Hegde, e-mail

The income-tax rule does not give blanket exemption to rent-free accommodation if one is working in a project site. To be tax-free, in addition, it must be ensured that the accommodation is in a `remote area'. The definition of 'remote area' given for this purpose, however, is ridiculous. An area located at least 40 km away from a town having a population not exceeding 20,000 is a remote area as per the definition. This makes all the four metros remote areas. Levity apart, your employer perhaps wants to play it safe and does not want to take advantage of the poor drafting of the definition of the term remote area.

Tax-free salary

WHAT is the limit up to which salary is not taxable? -- S. K. Jaiswal, e-mail

The present tax-free limit is Rs 50,000 which takes care of income not only from salary but from the other four heads of income as well. If a person gets a consolidated salary of Rs 75,000, he would be out of the clutches of income-tax, thanks to a standard deduction of Rs 25,000 assuming he has no other source of income. A much higher salary can ensure a tax-free existence provided the employer and employee agree on an optimum salary structure that takes advantage of all the exemptions and concessions.

Foreign national's tax

A FOREIGN national who is a resident but `not ordinarily resident' is employed in an Indian joint venture (JV). He gets remuneration for his services in India from the Indian JV as well as from the foreign company, his former employer, which has deputed him to the Indian JV. Tax is deducted at source from his salary by the Indian JV while the foreign national pays advance tax on his salary income that he receives from the foreign company. Incidentally, such advance tax is footed by the foreign company. In terms of Section 131, the tax authorities are insisting on the personal appearance of the foreign national for an enquiry and want to know the details of his other foreign income. Advise. -- B. D. Rangachari, e-mail

The foreign national, being a resident but `not ordinarily resident', is required to pay tax only on his Indian income unless he has business income abroad which business is controlled from India. His Indian income includes the salary from the foreign company as well because such salary is earned in India. Therefore, he has nothing to fear and should place all the details before the tax authorities. Only tax on perquisites discharged by the employer is outside the pale of tax. The tax paid on salary other than perks by his other employer (foreign company) is, therefore, itself taxable. Since he is working for two employers simultaneously, he should have chosen the Indian employer so that tax could be deducted by the Indian employer from his Indian salary so as to take care of the taxes of the combined salary income.

Asset write-off

QUITE often, assets which are useless are written off without any amount having been received may be because there are no takers therefor? But Section 43(6) fails to consider such a situation while defining WDV. Will it not be odd in the event to find an asset still figuring in the tax records while it has been removed from the books? -- Sampath Kumar, e-mail

I do understand your misgivings on this score. But the truth is, the income-tax law, with the introduction of the block concept, does not focus on individual assets. So much so, an asset may not be physically in existence but its value may remain embedded in the block value. While the situation pointed out by you is a classic example of this, you can also visualize a situation where an asset is sold at a huge loss by a going concern. The same piquant situation will ensue here too.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

S. Murlidharan

Article E-Mail :: Comment :: Syndication

Stories in this Section
Project Sachin's profits

Equal helpings

My sonny got a gaadi

Today's sunrise, tomorrow's showpiece

All the secret of high energy