LTA exemption cant be claimed for travel outside India

Updated: Dec 17 2013, 16:01pm hrs
This Diwali, my employer gave me a cash bonus of Rs 15,000 and a gift voucher of Rs 5,000. I want to know whether such bonus received is taxable in my hands.

Anand Patel

Under Section 17 of the IT Act, salary includes bonus received from the employer and, as such, it is taxable as income from salary in the hands of the employee. Accordingly, the cash bonus of Rs 15,000 will be taxable in your hands. However, gift vouchers are not taxable in the hands of the employee.

I work in a private organisation.

I am planning a vacation to Mauritius this year, along with my wife and daughter. The trip is expected to cost me about Rs 1,00,000, including travel costs, and I am entitled to an LTA of Rs 75,000. How much amount can I claim as exemption and what are the documents that I need to submit for it

Dipankar Gupta

Leave travel exemption (lTA) is subject to the expenses actually incurred towards travel in India. As such, you will not be able to claim the exemption since you will be travelling outside India.

I purchased a residential property last month with a home loan from SBI. I am paying EMIs to the bank now. Can I claim these EMI payments under Section 80C

Damodar Selvaraj

The EMI consists of two components, i.e., the principal amount and the interest. The principal component of the EMI qualifies for deduction under Section 80C as re-payment of housing loan. Further, the amount paid as stamp duty and registration charges at the time of purchase will be eligible for deduction under Section 80C. Moreover, you can claim interest expenses actually paid, subject to a maximum of R1,50,000 as loss from house property. The income from house property can be deducted from income from salary while computing the taxable income for the financial year.

I started trading in shares in January 2013, at the instance of one of my friends. As the stock market declined, I started selling the shares and lost about R1,00,000. I do not want to buy or sell shares in future. Can I adjust this loss against any income

Mihir Moitra

Since you started purchasing shares in January this year, we presume that your loss is either short-term capital loss (as the holding period of the shares is less than 12 months) or speculative loss and not a long term-capital loss. The said loss can be set off against income for the same financial year, by applying the following rules (a) short-term capital loss can be setoff against any capital gain, i.e., short- term as well as long-term; (b) loss from the speculation business can only be set off against profits from the speculation business.

If, in the current year, you do not have any capital gains or other speculative income, as the case may be, the losses can be carried forward and set off in subsequent years by applying the same rules as stated above. The period for which the losses can be carried forward are: (a) losses from the speculation business can be carried forward for four years; and (b) short- term capital losses can be carried forward for eight years.

Can I gift certain bonds owned by me to my wife As she does not have any other income, will the interest income on these bonds be tax-

exempt in her hands

Rajiv Kumar

Any sum received without consideration, i.e., gifts, in excess of R50,000 in a year by an individual or HUF is liable to be taxed under section 56(2)(vi) of the IT Act. However, exemption is given to gifts received from spouse. As such, the gift of bonds by you will not be taxed in the hands of your wife. However, income accruing on the bonds, i.e., interest will be clubbed in your hands for tax under section 64(1)(iv) of the It act.

Note that as held in the case CIT v/s M.P Birla [1983] 142 ITR 377 (Bom.), interest income received from any subsequent bonus issue on such bonds (if any) will not be clubbed in your hands as there is no transfer of bonus units from you to your wife.

Suresh Surana

The writer is founder, RSM Astute Consulting Group

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