Business Daily from THE HINDU group of publications
Monday, Feb 11, 2008
ePaper | Mobile/PDA Version
Business Daily from THE HINDU group of publications Monday, Feb 11, 2008 ePaper | Mobile/PDA Version |
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Mentor
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Income Tax Columns - For the Asking Some tips on systematic investment plan I have invested in a balanced mutual fund through an SIP (systematic investment plan) of Rs 1,000 for six months. I want to know how the holding period will be calculated in this case because I have been allotted different number of units at different points of time. Also, if I want to save tax, what should be my minimum holding period in this case. Neerav Nagar, email The holding period would be calculated lot by lot. That is the allotment made in January would attain the status of long-term capital asset after 12 months of holding reckoned from the date of allotment in January, the allotment made in February would become long-term after 12 months of holding reckoned from the date of allotment in February and so on. Long-term capital gains from transfer of units of equity-oriented schemes (more than 65 per cent of the proceeds of the scheme should have been invested in equity shares) of mutual funds are tax-free. Therefore, first you have to ascertain whether the SIP you are participating in makes the grade as an equity-oriented scheme. If it is indeed so, you have to hold the units for 12 months at least before selling them in order to be eligible for exemption SECURITY DEPOSIT When a property is taken on a company lease, is the perquisite value calculated on the rent alone or is the security deposit amount also taken into consideration in some way? For example, if the company has take on lease a property and has paid a deposit of Rs 10 lakh and is paying a rent of 15,000, would there be any tax liability on the employee utilising this property as CLA with respect to the security deposit? Further, if the company has a policy whereby it deducts a certain amount from the salary of the employee for providing the CLA (say the rent amount plus 10 per cent of deposit amount), what would be the income-tax implications for the employee? Roshan Balasubramaniam, email When a company has provided a leased accommodation to its employee, the taxable value of this benefit is the actual lease rent or 15 per cent of his salary, whichever is less. The income-tax rule has not seen through the trick - rent camouflaged as interest on security deposit. This is surprising because, the wealth tax law contains provisions to tackle this trick. Having valued the accommodation thus, the amount if any recovered from the employee would be deducted and the net amount alone would be the value of the perquisite provided. The nomenclature of the amount recovered is immaterial so long as it is for the purpose of the house thus provided. MISCONCEPTION CLEARED I own shares in the ETF Morgan Stanley Mutual Fund, a diversified equity closed-end fund which will mature in February 2009. When the mutual fund matures, will my broker be obliged to deduct Securities Transaction Tax from the maturity amount and show this in a Contract Note? I am concerned that neither the broker nor Morgan Stanley will deduct STT nor I will be required to pay tax on longterm capital gains C. Almeida, email There are some factual errors in your query which I would first like to correct. What you own are units and not shares. This is of course a technical difference. Second, the broker is not in the picture. It is the responsibility of the mutual fund to pay STT just as it is the responsibility of the stock exchange concerned to pay STT in case of shares. So relax. DOUBTS ABOUT ELSS I have invested Rs 15,000 in an equity-linked savings scheme (ELSS) in February 2007 in which there is a lock-in period of three years. I have also got tax benefit under Section 80C. I have heard that units of a closed-ended mutual fund can be sold on the stock exchange. Can I do so? If yes, will I have to show Rs 15,000 as a part of my income for assessment year 2008- 09? Neerav Nagar, email The scheme for ELSS contemplates repurchase being made by the fund. Therefore this rules out the stock exchange route for exit. Be that as it may. There is a loophole in Section 80C(6) which while targeting shares and debentures transferred before three years after having obtained the tax benefit, has somehow not mentioned units so transferred after having claimed the tax benefit. Thus while the deductions granted earlier towards the eligible schemes of investments in shares and debentures would become taxable in the year of premature sale, the position with regard to similar premature sale of units seems to be in favour of the assessee, thanks to this omission. S. MURLIDHARAN ASK! Send in your queries to ask@thehindu.co.in http://MentorQA.blogspot.com More Stories on : Income Tax | For the Asking
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