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T. Banusekar

IF AN employee fails to submit the salary certificate from his previous employer or does not furnish the particulars of the salary drawn from the previous employer in form 12B, is it necessary that the present employer annualise the salary based on the present salary in arriving at the tax to be deducted at source?

Swati

Reply

The present employer has to annualise the salary based on the present salary income in such cases in order to determine the tax to be deducted at source. There is no mandate that the employee must necessarily furnish the particulars of his `other income' or salary from his former employer to the current employer. The law in Section 197 provides that the employee "may" give the particulars of such income. The use of the word "may" in the section in this regard clearly shows that there is an option to the employee to furnish the said particulars. He may choose not to furnish the same.

In such a case, the current employer can deduct tax at source on the salary from such employer assuming that the salary of the present employer is the only income of the employee. Section 197 also provides that if the employee provides the particulars, the employer "shall" take the same into account in determining the tax to be deducted at source. The use of the word "shall" in this context also makes it clear that if the employee furnishes particulars in form 12B, the employer is bound to take the same into account in determining the tax to be deducted at source.

Query

I am a retired Kerala State Government employee. I get pension from the Government. What are the documents that I need to enclose along with my return of income as proof of having received income by way of pension? I have been holding 25 shares of Infosys Technologies Ltd since 2002. I received 75 bonus shares of the company in July 2004. Do I need to hold the bonus shares for at least one year to get exemption when it is sold?

Sabachan Thankappan

Reply

If tax has been deducted at source on pension, Form 16 would have been issued, containing also the particulars of the pension for the year. This will have to be enclosed with the return of income so that credit can be taken in respect of the tax deducted at source on the pension. Other than this, no other proof needs to be furnished in respect of the pension along with the return of income. As regards the shares, you are probably referring to the exemption under Section 10(38). This exemption is available in respect of shares sold on a recognised stock exchange and where securities transaction tax has been suffered at the time of sale of the shares. The exemption can only be claimed if the gain is long term.

Thus, if you satisfy the other condition in Section 10(38), you can claim exemption on the sale of bonus shares only if you have held them for a period exceeding 12 months.

If you have not held it for more than 12 months tax will have to be paid at 10 per cent (increased by the appropriate surcharge and additional surcharge) in accordance with Section 111A.

Query

My father is 75 years old. He does consultation work and receives a professional charge of Rs 5,000 a month for this. This he receives from a private limited company. He does not have any other income. Can he issue form 15H/15G to the company for non-deduction of tax at source?

Daxesh Shah

Reply

He cannot. The recipient of interest income can issue this form to the person responsible for paying the same for non-deduction of tax at source. The form cannot be issued for non-deduction of tax at source on payments received by way of professional income.

The option will only be to approach the assessing officer (AO) under Section 197 requiring the AO to issue a certificate of lower rate of deduction of tax at source or nil rate of deduction of tax at source.

Query

My mother is the owner of a land. I want to take a housing loan in my name and construct a house on the land owned by my mother. The house will be self-occupied. Will it be possible for me to claim the deduction in respect of interest and also the rebate in respect of the principal repayment of the loan though the land is owned by my mother?

Gokul

Reply

If in the instant case it can be taken that you are the owner of the house property and, therefore, you can claim the deduction in respect of interest. The same will be the situation in respect of rebate under Section 88 as well, in respect of the principal repayment of the housing loan. The law recognises dual ownership in respect of immovable property, that is, the ownership of land by one person and that of building by another.

Mail your queries to taxtalk@thehindu.co.in or by post to Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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