Avinash K Shah: If I obtain a loan from my friends and buy a flat with it and then use the amount of the home loan from a bank to pay back the loan taken (a sort of bridge loan), shall I be able to claim the tax benefits associated with home loans?
You can claim deduction for interest and loan repayment in respect of home loan on the basis of the certificate issued by the bank.
HPS Iyer: My son is a guest faculty professor for MBA institutions. He follows the mercantile system of accounting. For the guest faculty lectures delivered by him during the month of March 2007 (FY 2006-07), one of the institutes paid Rs 89,785 by cheque, dated 09.04.07, after deducting TDS of Rs 4,825. The institute is showing this payment as well as the TDS in the financial year 2007-08. The TDS was paid into the government account on 23.05.07. Another institute had also followed the same procedure, but deposited the TDS in the government account on 07.07.07. As my son follows the mercantile system of accounting, can he show the above incomes in the financial year 2006-07? Can he adjust the TDS deducted by the institutes in the tax to be paid for the financial year 2006-07?
Your son is following the mercantile system of accounting. As such, the income receivable for March 2007 will have to be offered for tax in financial year 2006-07. The TDS on the said income will have to be claimed in financial year 2006-07 in view of the provisions of Section 199 of the Income-tax Act, which states that credit for tax deducted at source is allowable in the year in which the income is assessable. The schedule for claim of TDS credit in return form should be properly filled to avail the credit for the same.
Sudhir Gokarnkar: What is double taxation policy? I was deputed to the US from April 1, 2006 to July 16, 2006. My US income had two components, US allowance and Indian living component. The US federal tax was computed considering both the components and I have also filed my 2006 US tax returns accordingly. My Indian salary also includes the Indian living component of my US stay and my tax deductions indicated in Form 16 are computed considering this. Is this double taxation?
Please note that under the Indian Income-tax Act there is no double taxation policy. The taxation of individual in India is based on his residential status. The incomes, such as salaries, are taxable in the country where services are rendered. As per Article 16 of the Double Taxation Avoidance Agreement between India and the US, in cases where stay in the US is less than 183 days, the remuneration is paid by Indian entity and such remuneration is not claimed by the US entity as expenses, then such remuneration can only be chargeable to tax in India. Please check with your employer on the above points to claim exemption from taxation in the US. As regards withholding of tax in the US, you can claim refund for excess tax by claiming tax relief under Section 90 of the Income-tax Act, 1961 in respect of US federal tax on the income, which is taxed in the US as well as in India.
Sudhir Gokarnkar: What is double taxation policy? I was deputed to the US from April 1, 2006 to July 16, 2006. My US income had two components, US allowance and Indian living component. The US federal tax was computed considering both the components and I have also filed my 2006 US tax returns accordingly. My Indian salary also includes the Indian living component of my US stay and my tax deductions indicated in Form 16 are computed considering this. Is this double taxation?
Please note that under the Indian Income-tax Act there is no double taxation policy. The taxation of individual in India is based on his residential status. The incomes, such as salaries, are taxable in the country where services are rendered. As per Article 16 of the Double Taxation Avoidance Agreement between India and the US, in cases where stay in the US is less than 183 days, the remuneration is paid by Indian entity and such remuneration is not claimed by the US entity as expenses, then such remuneration can only be chargeable to tax in India. Please check with your employer on the above points to claim exemption from taxation in the US. As regards withholding of tax in the US, you can claim refund for excess tax by claiming tax relief under Section 90 of the Income-tax Act, 1961 in respect of US federal tax on the income, which is taxed in the US as well as in India.
(Anish B Mehta is a Member, ICAI)