Posts

Showing posts from 2009

TAX TALK- 12.10.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)
“TAXABILITY OF AMOUNT FORFEITED?”
Query 1]
My nature of business is to carry on business of acquiring, establishing, Running & maintenance of Hospital & Clinic Research Institutes. I want to know the treatment of the expenditure for Web designing, Domain Name & Space incurred before Incorporation. Can it be treated as Preliminary Expenses? Confusion is arising as this particular expenditure is not specified in Income Tax Act in Section 35D.
[ash_deo123@rediffmail.com]
Opinion:

Conceptually, there is a difference in the concept of preliminary expenses under companies Act vis a vis Income Tax Act. Section 35D of the I.T. Act -1961 clearly and specifically mentions the expenditure to be included in preliminary expenditure. The I-T Act provides for amortization of preliminary expenses in 5 equal installments. The expenses referred to in your query doesn’t form the part of preliminary expenses for the purpose of Section 35D of the …

TAX TALK- 28.09.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)
“SET OFF AND CARRY FORWARD OF CAPITAL GAIN LOSS”
Query 1]
Loss on Sale of shares( held for less than 12 months) i. e. short-term capital loss can de adjusted only against short term capital gains on sale of shares. If net balance is profit, the tax is required to be paid. Any option to save tax? If there is excess loss whether it is carried forward & can be set off against short term/long term capital gains for next year. Please clarify.
For long term capital gains on sale of shares (held for more than 12 months), whether long term capital loss (on sale of share) can be set off? Any avenues to save such tax. Please guide. [nayan.lagad@cosmosbank.in]
Opinion:
“Capital gain” constitutes a separate class in itself in the I.T. Act, 1961 for taxability and set off provision.
The basic rules are: -i) Losses under the head “Capital gains” cannot be set off against income under other heads of income (like salary income etc)ii) Short term cap…

TAX TALK- 05.10.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)
“CHANGES IN TDS RATES……”
Query 1]
Sir, I am farmer. I produce vegetables (Tomato, Lauki, Karela, Khira, Papita, Bandi, Gobi) in 20 Acres of land. My farm is well equipped with DRIP Irrigation system. I have availed Rs. 5.00 Lacs loan facility from SBI. My income from this activity in the last year (i.e., from 01-06-2008 to 30-05-2009) was Rs. 5,00,000/-. The annual income normally varies from Rs. 4 Lacs to Rs. 7 Lacs. Total sales varies from RS. 20 Lacs to Rs. 30 Lacs and savings after all expenses ranges from Rs. 4 to Rs. 7 Lacs as mentioned above. I have never filed any income-tax return so far.
Please advice as to whether: 1. should I file income-tax return?
2. I propose to purchase a house in Durg city costing Rs. 15 Lacs. What account or papers I should keep? [Narayan Chawde, Durg]

Opinion:
Plainly & simply speaking, filing the return of income is mandatory for persons who have TAXABLE income above basic exemption limit. If you …

TAX TALK- 21.09.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)
“WHETHER EXPENDITURE IS DISALLOWABLE U/S 40A (3) IF AGGREGATE PAYMENT DONE AGAINST TWO DIFFERENT BILLS EXCEEDS RS. 20,000/-? ”

Query 1]
I want some clarification of Scope of section 40A (3) (As amended by the Finance Act-2008).
In the below mentioned case, if payment in a day of more than Rs. 20000 is made but against different LR/Bill, Whether It will be allowed or disallowed while computing taxable income of a company: -

Payee: Sai Transport
Bill / LR No.
Amt. Rs.
Time
Date
1.
15000/-
10 am
25th Sept
2.
18000/-
3 pm
25th Sept
Total payment made in a day is Rs. 33,000/- (Rs. 15000/-against Bill No. 1 & Rs. 18,000/- against Bill No. 2 at different time. Please give your comment considering scope of section 40A (3)? [sunil.kalbande@bilt.com]
Opinion:
Expenditure & payment of that expenditure in cash exceeding Rs. 20,000/- is necessary for disallowance u/s 40A(3).
Section 40A(3) of the Income Tax Act, 1961 reads as under: -”Where the assessee incu…

TAX TALK- 14.09.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)


“CALCULATION OF TURNOVER - INTRA DAY TRADING IN SHARES & DERIVATIVES TRANSACTIONS”

Query 1]
Kindly clarify how the limit of Rs. 40 Lacs for compulsory audit of accounts would be applied in case of person doing trading in derivatives? How Sales, Turnover or Gross Receipts is to be calculated in such cases? How the turnover/ sales etc will be calculated in case of intra day trading in equities? Please elaborate the accounting aspects of the transactions. [k_kumar39@hotmail.com]
Opinion:

1. TURNOVER IN CASE OF DERIVATIVES: I] Accounting Aspects: a) In the case of derivatives, transactions are not recorded at the time of purchase/sale. b) Only the initial margin and mark-to-market margins are recorded as and when paid, and the profit or loss on the futures transactions is recorded as an income/expense on squaring up of the transaction or on expiry of the contract. II] Calculation of Turnover: a) The margin paid is certainly not the …

DIRECT TAXES CODE 2009 : AT A GALANCE

DIRECT TAXES CODE 2009 : AT A GALANCECA - CA. Naresh Jakhotia

- Tax law in simple and easy to understand language.
- The new Income Taxes Code to be applicable from 1st April, 2011.
- Personal Income tax rates slashed substantially. o Upto 10 lacs (less existing basic exemption limit) : 10% o Next 15 lacs : 20% o Over 25 lacs : 30%
- All Companies to pay tax @ 25%.
- MAT @ 2% of gross assets. Even loss making companies to pay MAT.
- No provision for MAT credit.
- Dividend distribution tax to continue @ 15% of divided.
- Foreign companies also to pay 15% of branch profit tax.
- Firms to continue to pay tax @ 30%.
- No cess or surcharge in any case.
- Agricultural income continues to be included in taxable income only for rate purposes.
- Wealth tax exemption limit raised to 50 crores. To include financial assets like shares.
- Limit of savings increased fr…

TAX TALK- 31.08.2009-THE HITAVADA

TAX TALK
BY CA. NARESH JAKHOTIA
(Chartered Accountant)


“DEDUCTION TOWARDS REIMBURSEMENT OF MEDICAL EXPENDTIURE …..”

Query 1]
Sir, We are a private limited company. We are paying salary to employees in the break up of Basic, HRA, Conveyance & Medical allowance.I want to ask is any deduction available in respect of medical allowances (paid as salary)or entire amount of medical allowance is taxable? What about the taxability of other items like HRA, Conveyance, and Basic? [dineshsinghgaharwar@rediffmail.com]
Opinion:
1. Medical Allowance: a) Only reimbursement of medical expenses up to Rs. 15,000/- is exempt from income tax. Amount received over and above Rs. 15,000/- is taxable as “Income From Salary”. b) Fixed Medical allowance is taxable in the hand of employee. It is not plainly exempt from income tax even if it is actually expended for medical treatment by the employee.
2. House Rent Allowance (HRA): In respect of HRA, the least of the following is exempt from tax u/s 10(13A):…

DO THE THANKLESS JOB & GET PROSECUTION AS A REWARD- T.D.S.

DO THE THANKLESS JOB & GET PROSECUTION AS A REWARD

Call it a T.D.S or a TEDIOUS. It’s tantamount to one and the same thing. Perhaps, no one can breathe comfortably (Exclude I.T. department) if one goes through the recent ruling of the Honorable Apex court. What a thankless job an assessee is doing for the Government? What is the reward an assessee is getting when it is working as an agent of the Government? All the more, what is the consequence that follows if a minor failure is committed by the assessee? A judgment with a far reaching effect was very recently delivered by the Honorable Supreme court in Madhumilan Syntex limited case wherein it is held that prosecution can be done for delay in depositing the T.D.S

BRIEF HISTORY OF THE CASE:
The amount involved in this case was a little more than Rs 1 lacs & relates to the year 1989. The company had deposited the T.D.S along with interest into the Government treasury after a delay of two-day, yet the AO (Assessing Officer) issue…

TAX TALK- 10.08.2009-THE HITAVADA

TAX TALK- 10.08.2009-THE HITAVADA
TAX TALKBY CA. NARESH JAKHOTIA
(Chartered Accountant)


“NON RECEIPT OF T.D.S CERTIFICATE …………..”


Query 1]Sir, we are working with a PSU. Kindly clarify whether group insurance compensation received from insurance company by staff is exempt from income tax or not?
[N. Subramanian]
Opinion:
1. Insurance compensation received under a group insurance scheme is not taxable in the hands of employee since it is a capital receipt.2. Further, if a person receives ex-gratia payment from the Central Government/ State Government/ Local Authorities/ or a Public Sector unit, consequent upon the injury to the person while on duty, such ex- gratia payment will not be liable to income tax. [Circular No. 776 dated 08.06.1999]

Query 2]
Sir, Kindly let me know whether deductee can claim credit when deductor did not issue or refused to issue Certificate for the Tax Deducted at Source. Is it not binding on the part of deductor to issue TDS Certificate? What steps can deductee take i…