Are maturity proceeds of keyman insurance, assigned to a person during the term of the policy, now taxable?
— Prakash Sharma
The Finance Bill 2013 proposes that the benefit of exemption under Section 10(10D) will not be available in respect of a keyman insurance policy, which has been assigned to any person during its term with or without consideration. Such policies will continue to be treated as keyman insurance and the maturity proceed received by the employee would be taxable as profit in lieu of salary. This amendment is proposed to be effective from FY14.
I get salary ‘net of taxes’ and my tax liability is being borne by my employer for the last four years. Will the tax paid by the employer on my salary be included in my income?
— Arvind Kumar
According to Section 10(10CC) of the Income Tax Act, 1961, the tax actually paid by the employer on a perquisite provided to the employee will be exempt in the hands of the employee. According to certain judicial precedents, the tax borne by the employer on behalf of the employee constitutes a non-monetary payment and, as such, would not be included in your total income.
My husband gifted me R2 lakh with which I purchased jewellery. If I sell it, what will be the capital gain tax in my hand?
— Rashmi Sood
All income arising from assets transferred directly or indirectly to spouse without adequate consideration will be liable to be clubbed in the income of the transferor. Substitution of one form of property by another form will not make any difference. Further, the definition of ‘income’ in Section 2(24) includes capital gains. Thus, the gains arising from sale of jewellery is liable to be included in the income of your husband.
I received a residential flat as a gift from my father in August 2009, which was originally purchased by him in 1998. From which year would I get indexation benefits for computing capital gains?
— Anup Gupta
While computing the capital gains arising on transfer of a capital asset acquired by the taxpayer under a gift or will, indexed cost of acquisition should be computed with reference to year in which the previous owner first held the asset and not the year in which taxpayer became the owner of asset. In this respect, you may rely on the decision of Bombay High court in the case of CIT vs Manjula J Shah and the Delhi Tribunal in the case of Kamal Mishra vs ITO and claim the indexation benefit considering FY1998-99 as the base year.
I am a technical director in a private limited company. On successful completion of a particular project, my employer gave me a gift voucher of R50,000. Will this amount be taxable in my hand?
— Vikas Kumar
The value of any gift, or voucher, or token in lieu of which such gift received by the employee or by member of his household on ceremonial occasions or otherwise from the employer is taxable as perquisite. Where the value of such gift, voucher or token, as the case may be, is below R5,000 in the aggregate during the previous year, it is not taxed as a perquisite. In your case, the value of gift voucher exceeds R5,000. Therefore, the entire amount will be taxed as perquisites in your hand.
The writer is founder of RSM Astute Consulting Group
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