Can one adjust STT paid short term gains against 80C deductions? For example, my gross total income is Rs 1,35,002 comprising of Rs 30,119 STT paid STCG & Rs 1,04,883 other income. Also I have paid Rs 39,422 LIP. Now can I safely say that my total taxable income is below taxable limit?

?Nishhit

This point was clarified in an earlier article. STT paid short-term capital gains cannot be adjusted against Sec 80C. But such short-term gains can be adjusted against the basic exemption limit. So yours is an extremely interesting situation. What you would do in your return is to adjust your other income against the LIP first. This would leave a balance of Rs 65,461. Now adjust the Rs 65,461 against the Rs 1 lakh exemption thereby leaving a balance of Rs 34,539 remaining in the basic exemption. Now since the basic exemption can be adjusted against the STT paid short-term gains, in effect, you reach nil taxable income status.

I have a query regarding IT; I remember having read elsewhere wherein you have stated that GoI bureaucrats? income earned on any assignment outside India is tax exempt.

In a similar fashion, we academicians get UN assignments on policy advice in coutures outside India. Please let me know whether such consultancy/honorarium received from the UN institutions like the UNDP is tax exempt.

(Whenever I earn some consultancy income from the World Bank, be it in India or abroad, the World Bank always issues me a certificate stating that the income was tax exempt (under some agreement with the GoI)

?Thakkar

Salary received from UN is exempt. Staff Assessment is an amount appropriated from the salary by the UN for its own expenses. U/s 2 of the UN (Privileges and Immunities) Act, 1947 (read with Sec 18 of the Schedule thereto) the rest of the salary and emolument is exempt from tax in India. Even any pension received by ex-employees after their retirement is also exempt from tax – Circular 293 dt 10.2.81.

Unfortunately, we are not aware of any special concession granted to fees for consultancy.

Since I was traveling and some of my papers were not in order, I could not manage to file my tax return in time this year. I am a salaried person and my salary is my major source of income. The only other minor income would be on account of the savings bank interest. Now what are my options and what would be the best course of action?

?Manjit

You should make arrangements to file your tax return as soon as possible. If you file your return before March 31, 2008, no penalty would be applicable to you. Also, interest @1% per month will be payable on the difference between the final tax due and the tax already deducted.

My daughter is studying abroad. She is reaching the end of her course and may need some funds during the interim period before she finds a job. She may require the rupee equivalent of $10,000. Am I allowed to send so much money to her and what will be the tax implications thereof on both her and me?

?Bhaskaran

As per Sec 56 of the Income Tax Act, you would be considered a ?relative? of your daughter and consequently there would no tax implication whatsoever on any amount that you gift to her. Also, under FEMA, RBI allows you to send as much as $1,00,000 per year to your relatives for family maintenance. You may approach your bank for this purpose and they would help you with the procedure for remittance of the money to your daughter?s account abroad.

Recently there has been a change in the taxation of Employee Stock Options (ESOPs). Can you elaborate on the same. I have been awarded some options and desire to know the optimal tax treatment thereof.

?Ravi Raja

Budget 2007 has brought ESOPs under the ambit of Fringe Benefit Tax (FBT). Earlier, FBT was not applicable on such ESOPs. However, from April, 2007 any ESOP awarded to the employee will be first taxable in the hands of the employer as FBT.

The tax will be applicable @33.99% on the difference between the price on the date of vesting and the exercise price. This tax though payable by the employer can be passed on to the employee. There is little you can do to avoid this tax. Upon sale of such ESOP shares, the difference between the sale price and the exercise price would be taxed as capital gain.

?The authors may be contacted at wonderlandconsultants@yahoo.com