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obligation of deducting and depositing TDS lies with your employer

Monday, March 21, 2011

Q-1) I am a non-resident Indian and have just returned to India. I have been offered a job with good package. Is it possible that this package is paid to me without deducting any TDS? Alternatively is it possible that the tax liability is borne by the employer?
-R.D. Singh, Matunga

Ans: The prima facie obligation of deducting and depositing TDS lies with your employer. Hence, it is not possible to pay your package without deducting TDS if tax is payable i.e. package exceeds the minimum taxable limit. Yes it is possible that the TDS liability can be taken over by the employer. However in such case the employer has to gross up your salary i.e. package plus tax and then on grossed amount the employer needs to deduct TDS and deposit the same with the Government.

Q-2) I am an employee and I use my own car for personal as well as for the business of the Company. The Company re-imbrues me the entire running and maintenance expenses of the car. Please advice me as to how the perquisite value of the car would be arrived.
-R.S. Anand, Charni Road

Ans: Since the car is owned by you, no perquisite can be attributed towards the use of the car. As regards the expenses of the car, if proper records with regard to the use of the car is available then the amount spent for official use would not be treated as perquisite. Only the balance would be treated as perquisite. However, if you have re-imbursed any part or the balance amount in entirety then no perquisite value could be attributed to you. Hence, only the remaining amount attributable to your personal use would be added as perquisite.

Q-3) I have received a loan of 25 lakhs from my company for the purchase of a residential property. The company is charging me an interest @ 4% p.a. Please advice me if any additional tax implication is attracted on this transaction?
-B.S. D’souza, Andheri

Ans: Any loan in excess of Rs. 50,000/- should be provided at the lending rates charged by the State Bank of India. Hence in your case, since the amount of loan is in excess of Rs. 50,000/- the rate should be as per State Bank of India lending rate. Assuming SBI lending rate @ 10 % p.a. the difference of 6 % p.a. would be treated as a perquisite in your hands and you shall be required to pay tax on the perquisite.

Q-4) I am a senior citizen aged 80 plus. I retired almost 25 years back from a government job. I survive on my pension and interest from senior citizen bonds, Bank FD interest and MIS interest. I do not have a PAN No. since I do not have a taxable income. Till last year all the authorities were accepting declaration for non deduction of TDS. However, from current year all of them have started asking for PAN No. else they would deduct TDS @ 20% from my interest income. Please explain why so?
-Mangesh Parab, Bombay Central

Ans : It is true that till last year the declaration would suffice for non deduction of TDS. From current year it has been made mandatory that irrespective of the total income all assessee need to furnish their PAN No. If PAN No is not furnished the rate of TDS is 20% p.a. out of the said income. This has been done to verify the payments and receipts. Hence, only declaration would not suffice and at this juncture of your life you must obtain a PAN No. Along with your PAN No. you can file the respective declaration to avoid TDS.

Q-5) Who are required to register for TDS Deduction?
-Raj. S. Kumar, Bandra

Ans : All assessee other that individual and Hindu Undivided Family need to register themselves for TDS deduction from the beginning, if they are likely to make payments for certain expenses, which are covered by TDS provisions. Individual and Hindu Undivided Family, if they are carrying on a business and their accounts are subjected to Tax Audit under the Income Tax Act, 1961 for a financial year, then from next financial year they need to register for TDS deduction and start deducting TDS from the beginning of the financial year itself.

Q-6) I have a house in my name and have taken a housing loan on the same. I have received another house from my parents under a will during the current financial year. Please explain the tax implication of having more than one property.
-Sona Jadhav, Byculla

Ans : In the circumstances described by you, you own two properties (houses). Out of the two, if one is self occupied by you and the other is not, then the self occupied property does not attract any income tax. However, the other, would be deemed to have been let out by you and fair market rent would be taken as the rent income and you will have to pay tax on the said deemed income. Alternatively if the second property is rented by you then the actual rent received would be subject to income tax.

Under Wealth Tax Act one self occupied house is tax free and is not subjected to wealth tax. However, the second house would attract wealth tax liability. You shall have an option to claim exemption of one property from wealth tax i.e. the property having higher value can be claimed exempted. If, the value of the other house, along with other taxable assets exceeds the minimum basic exemption, then wealth tax needs to be paid by you.


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