Business Daily from THE HINDU group of publications
Monday, Oct 08, 2007
ePaper
Business Daily from THE HINDU group of publications Monday, Oct 08, 2007 ePaper |
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Income Tax Columns - For the Asking Pick the right Form for filing tax returns Could you please tell me the form I have to file my return in? Besides rental income, I have income that is subject to TDS . I have repaid housing loan during the year. Sachi, email
Separate forms have been prescribed, depending upon the sources of income and one’s status. If one has only salary besides interest income, he has to file return in ITR 1 but if one has these incomes as well as income which are assessable under any other head of income except business, he has to file return in ITR 2. If one is not assessable for salary but is not in business either, for him too the form is ITR 2. PPF accountI have a PPF account wherein I deposit Rs. 70,000 each year. I would like to now open PPF accounts in the name of my children as well, and deposit Rs 70,000 each year in their respective accounts. I do know that Section 80C permits a maximum of Rs 70,000 investment per annum for tax benefit. Notwithstanding the tax benefit, can I invest in my account and claim tax benefit and, additionally invest to the full extent of Rs 70,000 each year in my children’s account without any tax benefit. R. Ramesh, email
Notification MOF (DEA) 908(E) dated December 6, 2000, says the limit of Rs 70,000 applies to the individual for deposits into his own account as well as into the accounts of his minor children. In other words, the limit is a combined one. New HUF?My father has a HUF account and he is the Karta of the HUF. Can I open my own account and create a new HUF consisting of myself, my wife and my two minor children? Arvind Jain, email
The Hindu law insists on there being an ancestral property devolving from generation to generation lineally as a precondition for coming into being of a HUF. Please remember HUF is a creation of law and cannot be formed. But the Supreme Court verdict in Surjit Lal Chhabda vs CIT (1975 101 ITR 776) had, it is respectfully submitted, opened the floodgates for creation of a HUF by throwing one’s self-acquired property into the family hotchpot. Now people create HUFs with a view to reducing the overall tax bill. Section 64(2) seeks to address the problem of throwing self-acquired property into the family hotchpot by deeming the income from such property as having accrued to the individual despite the transfer till there is a partition of the family. But unfortunately this section deals only with situations when one while already being a member of a HUF, throws his self-acquired property into the already existing HUF hotchpot. It does not address the problem of starting a HUF from scratch through the simple expedient of throwing one’s self-acquired property into the family hotchpot. Advantage, ECBIndia mobilised a record $21 billion through external commercial borrowing (ECB) in the fiscal 2006-07. What are the prime reasons for Indian corporates gravitating towards ECBs? Pushkar Lal Sardana, New Delhi
The preference for ECBs is explained by the lower rates of interest in the US and European markets vis-À-vis in India. It is as simple as that. The rising rupee vis-À-vis the dollar has come as a bonus — the servicing charges as well as repayment obligations would now entail lesser rupees. This of course could have been an entirely serendipitous development for the borrowers. ECBs give a huge advantage in the matter of interest. Its downsides are the inevitable higher transaction cost, especially the fee payable to foreign merchant bankers for sewing up the deal and the grim prospect of depreciation of rupee which of course may not haunt the Indian corporates in the near future. The preference for debts Indian or other of course is to give a disproportionate reward to the shareholders in terms of EPS given the fact that debts normally are much cheaper and when a company is on a roll, its ROI would be much larger than the rate of interest. This is the very idea of financial leverage. ECBs have come to magnify its effect. S. MURLIDHARAN More Stories on : Income Tax | For the Asking
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