Natraj Paul: I was working as a pilot and went abroad for aircraft training in July 2006. After I returned, I paid the cost of training as per the bond. Then, I left the company in September 2006 to join another company and went for training on a different type of aircraft. Can the amount I paid my previous employer for being freed of the bond be set off against my income for 2007-08.
According to the provisions of the Income-tax Act, the deduction for any expenses can be claimed against the income if the said expenses are incurred for earning that income. We understand that you will have salary income. Against the salary income, no other deductions are permissible, except deduction on account of (a) tax paid on employment and (b) entertainment allowance specifically granted to the government employee. Further, against income from other sources, the deduction for any expense will be allowed if the said expense is incurred wholly and exclusively for earning that income.
JN Punekar: According to the Annual Information Return to be filed in the tax return, should “payment of an amount of Rs 2 lakh or more for acquiring units of mutual fund” be reported?
As per the instructions for filling out the form, the information has to be furnished for transactions entered during the financial year 2006-07. In view of this, if you have made aggregate payment of Rs 2 lakh or more for purchase of units of mutual fund during the entire year, the said information will have to be furnished in the return of income.
MM Mukhija: Kindly clarify whether 1) monthly reimbursement for conveyance on use of own car for official use is taxable or not. 2) Any receipt of payment on sale of shares more than one year old has to be shown in the returns or not.
The monthly reimbursement for conveyance on use of own case for official use will not be taxable in your hands since the company will be liable to pay fringe benefit tax on the said reimbursement.
The query No 2 is not clear. Please note that you need to disclose information in relation to payment of Rs 1 lakh or more during the year for purchase of shares in Schedule AIR to the return of income.
Further, capital gain arising on sale of shares held for more than 12 months will be exempt from tax provided the Securities Transaction Tax is paid on the sale transaction.
Dividend received from domestic companies is totally exempt from income-tax. However, interest is liable to be taxed unless the same is our Our taxable income. exempt as per any specific section of the Income-tax Act.
S Mane: I am a self-employed and make around Rs 1,00,000 every year. I had taken a personal loan of Rs 75,000 in June 2007. Will this loan be considered as taxable for 2007-2008.
If your taxable income from all sources does not exceed Rs 1,10,000 for the financial year 2007-08, you need not have to furnish return of income for the said year.
The loan of Rs 75,000 borrowed by you in June 2007 is not to be considered as your taxable income.
Write in with your income tax queries to mymoney@ hindustantimes.com
Anish B Mehta, Member, ICAI, he can be reached at anish.mehta at haribhaktigroup.com