Financial Daily from THE HINDU group of publications
Monday, Nov 28, 2005
Financial Daily from THE HINDU group of publications Monday, Nov 28, 2005 |
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Taxation Columns - For the Asking Is there income-tax on political parties?
ARE political parties free from the burden of income-tax? Mukul Patnaik, Cuttack Practically. Income from house property, income from other sources and capital gains are completely tax-free. That leaves only one head of income — business. Voluntary contributions received from anyone are also tax-free. One often wonders whether this munificence is misplaced.
Why FBT
COULDN'T the Finance Minister have achieved his objective by disallowing personal expenses rather than ushering in fringe benefit tax (FBT)? Ayodhyanath Purohit, Allahabad When you say `personal expenses' it opens the veritable Pandora's box. A car provided by the employer may be used both for personal and official purposes. Disallowance inevitably leads to hair-splitting. The Finance Minister opted for a safer course by avoiding this hair-splitting and plumped for a regime of FBT. It must be said that he has been reasonable in deeming only a small percentage of the specified expenses as enuring for personal benefit of the employees. Where he has erred is in imposing FBT even on expenses where there is admittedly no personal element. Pray, where is the personal element in sales promotion and advertisement expenses?
Share deals
I AM a salaried person with a taxable salary of around Rs 5 lakh. I have earned short-term capital gains of Rs 1 lakh from the share market but also incurred huge loss investing in the shares of companies (which are derisively called vanishing companies) and holding them in vain for 5-6 years. Can the loss be set off against the gain? Do I have to pay advance tax? Ashish, email Loss under the head `capital gains' is not allowed to be set off against income from other heads of income, now as well as in future when it is allowed to be brought forward. Long-term capital losses come for a even more severe treatment — they cannot be set off against short-term capital gains now or in future when they are allowed to be brought forward, whereas short-term capital losses can be set off against long-term capital gains now as well as in future when they are allowed to be brought forward. In the event, you will have to pay tax on short-term capital gains despite having huge long-term capital losses. As a corollary, you will also have to pay advance tax on such gains. The only small mercy is capital gains being an irregular source of income, and hence not amenable to prediction beforehand, do not attract interest under Section 234C to the extent they have been earned after the prescribed date of instalment. Needless to say, one has to pay the future instalments along with the backlog once they have been earned.
(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)
S. Murlidharan
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