The Hindu Business Line : Is online trading a form of employment?

I am a government employee and I want to do online trading in shares. Am I barred from doing this on the ground that it would amount to another employment?

Senthil Kumar, email

No certainly not. Online trading by no stretch of imagination is another employment. Yes, in terms of employment rules one has to take permission from higher authorities for doing certain things. Please look into your service rules whether such permission is required for investments.

Returns of senior citizen

I am a senior citizen. My monthly pension is Rs 20,000 and I invest in Section 80C securities to the extent of Rs 50,000 annually. Am I required to file income-tax return? I have a car and a bungalow.

M. S. Ulaganathan, Karaikudi

I am afraid you have to because even though for the assessment year 2008-9, the tax-free limit is Rs 1.95 lakh — and your total income would be Rs 1.90 lakh — the return has to be filed. The reason is for the purpose of filing return, the accent is on gross total income and not on the total income. Since your GTI — before making the Section 80C deduction in your case — is more than the tax-free limit, you have no option but to file the return with nil tax liability. That you have a house and car has no relevance with the abolition of the economic criteria scheme for filing returns.

Life insurance

There is a debate going on about tradability of life insurance policies. What exactly is it? I am a commerce graduate.

Roshni Tulzapurkar, Mumbai

There is a clear line between assignment and tradability of policies. As it is, there is no bar on assignment of policies, which borrowers normally do in favour of lending banks and other financial institutions.

But insurers, especially LIC, seem to frown on trafficking in life insurance policies on the ground that the one paying the premium should have insurable interest.

But the clamour for tradability has increased because those who are unable to pay further premiums have to settle for surrender value which but begets a much smaller sum whereas if the same policies were not to be surrendered but sold to someone in the market he would pay much more than the surrender value.

In other words, trading would be a win-win game for both the seller and buyer, goes the argument.

Disallowance of capex

Why can't capital expenditure be allowed in instalments instead of being completely disallowed?

Mahendra Khemka, Surat

You are presumably referring to Section 37(1) of the Income-Tax Act. The Department always examines the expenses claimed under this section with a fine toothcomb with a view to disallowing them in a spirit of sadism. Bulk of the litigation under the income-tax law revolves around the issue whether the expenditure under dispute is revenue or capital in nature. I fully agree with you that if expenditure is considered to be capital in nature, the law should provide for amortisation of the same on the lines of depreciation. This would be fair to both the sides and bring down litigation considerably.

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

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