I am an employee with a real estate company. I purchased a flat for R10 lakh against the market value of R85 lakh from the said company. Is there any tax implication?
—Subash Sharma
There is an employer-employee relationship between yourself and the company. Therefore, as per provisions of Section 2(24)(iv) read with Section 17(2) of I-T Act, the difference in value of the asset between the purchase price and fair market value of the flat shall constitute income in your hands. Accordingly, the differential amount of Rs 75 lakh will be taxable as perquisite in your hands.
The Indian company I was employed in sent me on deputation to its group entity in Qatar on September 11 last year. Currently, I am on the payroll of the Qatar-based company. Can you clarify whether the salary earned by me in Qatar is taxable in India. If not, will I still be required to disclose the said salary income in my I-T return along with the salary earned in India till September 10?
—Raghav G Menon
India follows physical presence test as the sole criteria for determining the residential status of an individual for tax purpose. As per Explanation (a) attached to Section 6(1) (c) of the I-T Act, an individual who leaves India for the purpose of employment is said to be a resident in India only if he is in India for 182 days or more. Since your stay in FY 2015-16 is less than 182 days, you will be treated as non-resident for FY 2015-16. Accordingly, salary earned by you in Qatar shall not be taxable in India and you will not be required to report the same in your income tax return, although the salary earned in India would be taxable in India.
The writer is founder of RSM Astute Consulting Group
Send your queries at fepersonalfinance@expressindia.com