The Hindu Business Line : Caught in a fix

From April to July 2005, I worked with one employer and from August 2005 onwards with my present employer. I have not claimed the benefit of exemption under Section 10(13A) in computing the tax to be deducted at source by my first employer.

When I forwarded the details of the rent paid up to July 2005 to my present employer, I was told that they can not take the same into account in computing the tax to be deducted on the salary payable by them. Is this correct? If yes, what is the recourse available to me? Jaishankar

Your present employer is right in stating that you cannot get the benefit of reducing the tax deductible by them, on their salary paid to you on the basis of the rent paid for the period prior to your taking up employment with them.

This would be so because, in such a case you would have to give the complete particulars of the income from your earlier employer and the tax deducted at source by them to the present employer and even in such a case, it will not be possible for your present employer to deduct tax at a figure which would be lower than what is deductible on the salary paid by them.

Your recourse will lie in filing a return with the tax authorities claiming the exemption under Section 10(13A) in respect of the period from April 2005 to July 2005 and if this results in a refund, the same would be granted by the tax authorities.

I booked a flat, which was to be constructed, and possession of which I was to gain in March.

It, however, appears that there may be a delay of one or two months in handing over possession of the property. I have started paying the EMI from July 2005.

I have forwarded the details of the principal repayment for the period from July 2005 to March 2006 to my employer requesting that the same be taken into account in determining the deduction available under Section 80C and consequently the tax to be deducted at source. My employer has stated that this would not be possible. Is this correct?

The undivided share of land was registered in my name in December 2004 and I paid the stamp duty and registration charges then. I did not claim rebate under Section 88 in that year.

Will I be able to claim the benefit in the subsequent year? Rajesh M

The deduction under Section 80C in respect of the principal repayment would be available only in the year in which the sum is paid.

In your case deduction in respect of the principal repayment during the period from July 2005 to March 2006 can be claimed in the assessment year 2006-07 since you have made the payment in the financial year 2005-06.

In the same manner you should have claimed the rebate under Section 88 in respect of the stamp duty only in the year in which it was paid which would be in the financial year 2004-05 (assessment year 2005-06). You cannot claim the benefit in the subsequent year.

I am the joint holder of shares of companies. What will the tax liability be when I sell the shares? Is the gain to be offered equally in the hands of the two joint holders or is it to be taxed in the hands of the first named holder? K. P. Mohana Kumar

The liability to tax will arise in the hands of the real owner of the shares.

If the joint owners own the shares equally the gain will be taxed equally. On the other hand, if one of them is the real owner the gain will fully be taxed in the hands of the real owner.

The question of taxing it equally merely by reason of joint holders or by reason of being the first named holder does not arise.

I have taken a housing loan. I have been paying the EMI in respect of the loan. Do I need to enclose a copy of the agreement for purchase of the house as proof of ownership of the along with my return for claiming the tax benefits under the Act? Amit

It would not be necessary for you to enclose a copy of the agreement for purchase of the house to get the benefit under Section 24 in respect of the interest and under Section 80C in respect of the principal repayment.

There is, however, no harm in enclosing the same. You will need to enclose a copy of the statement given by the housing loan company or the bank giving the particulars of principal and interest paid.

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

More Stories on : Income Tax | Income Tax | Tax Talk

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page