TAX TALK-26.09.2011-THE HITAVADA
TAX TALK-26.09.2011-THE HITAVADA
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“EMPLOYEE WELFARE TRUST ALLOTING SHARES TO ITS EMPLOYEE AT A DISCOUNTED PRICE-INCOME TAX IMPLICATION”
Query 1]
Sir, I am in the Company which got listed last year at NSE & BSE. The Company is having Employees Welfare Trust before its got listed in NSE & BSE. Employees Welfare Trust is holding shares of the Company since more than 5 to 6 years. Now Employees Welfare Trust is offering shares to employees (based on their tenure, performance & designation) at a discounted rate (say Rs. 15) as compared to the market rate around Rs. 200 on the date of transaction. I have accepted the offer and bought shares, with lock-in period of 6 months (insider trading). I am getting contrasting opinion on the matter and confused, whether difference of Fair Market Value - Purchase Price (Rs. 200/- – Rs. 15/-) i.e., Rs. 185/- is taxable as income from other source? Or, it will be taxable as and when I will sale the shares (Short-term or Long-term gain)? Kindly revert on the above, if it is taxable as income from other source then will I have to pay advance tax? [PDM - pdm1978@gmail]
Opinion:
1. Section 56 (2)(vii) specifies the following receipt taxable as income: (vii) Where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,-
a) Any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
b) Any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property ;
c) Any property, other than immovable property,-
i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;
ii) for a consideration which is less than the aggregate fair Market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:Based on certain set of normal presumption as to the Employee Welfare Trust, we are of the considered opinion that the difference between the fair market value and the purchase price would be taxable as “Income from Other source”.
2. The fair market value so adopted above would be taken as your cost whenever subsequently you sell the share [Section 49(4)]
3. The income would also be subject to advance tax payment provision.
Query 2]
I have taken a loan of Rs. 3 Lacs at 9% p.a interest from a co-operative society for educational purpose of my daughter. Later on, since my daughter did not procure admission, I made a fixed deposit of the amount in a bank at 9.5% p.a. interest. Now, what will be the taxable portion of interest? Will it be
1. Interest received (-) Interest paid or
2. Entire amount of interest received?[Dr. Jacob Sakariah-jacobsakariah@hotmail.com]
Opinion:
Net amount of Interest (i.e., Interest received Less Interest paid) will be taxable.
Query 3]
We are the Central Government Employee. We wants yours advise on Following points .
In Financial year 2009-10, we have availed Tax Rebate u/s. 89. Afterward, Income Tax Department had asked for explanation from our Disbursing officer. Our Disbursing officer deducted and deposited the amount in bank without our consent. Now our query is that how we can get back our deducted amount? What is the proper channel for the same? Please advise us. [J N V kanhiwada, Seoni -sarafaraj_hcet@rediffmail.com]
Opinion:
It appears that the amount of tax pertaining to the F.Y. 2009-10 has been recovered from your salary & the amount so deducted has been paid by the Disbursing Officer to the Government Treasury by way of TDS. The Disbursing Officer must have also filed the revised TDS return showing the revised TDS amount. You may ask the Disbursing Officer to issue the fresh Form No. 16 with above total TDS Amount (i.e., showing earlier as well as current deduction). With the Revised Form No. 16 so received & working of deduction u/s 89, you may file the revised return claiming the refund of excess TDS. The process of getting refund may be cumbersome, & time consuming. But you can get the refund of the excess amount of Income Tax paid on your income for the relevant year.
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“EMPLOYEE WELFARE TRUST ALLOTING SHARES TO ITS EMPLOYEE AT A DISCOUNTED PRICE-INCOME TAX IMPLICATION”
Query 1]
Sir, I am in the Company which got listed last year at NSE & BSE. The Company is having Employees Welfare Trust before its got listed in NSE & BSE. Employees Welfare Trust is holding shares of the Company since more than 5 to 6 years. Now Employees Welfare Trust is offering shares to employees (based on their tenure, performance & designation) at a discounted rate (say Rs. 15) as compared to the market rate around Rs. 200 on the date of transaction. I have accepted the offer and bought shares, with lock-in period of 6 months (insider trading). I am getting contrasting opinion on the matter and confused, whether difference of Fair Market Value - Purchase Price (Rs. 200/- – Rs. 15/-) i.e., Rs. 185/- is taxable as income from other source? Or, it will be taxable as and when I will sale the shares (Short-term or Long-term gain)? Kindly revert on the above, if it is taxable as income from other source then will I have to pay advance tax? [PDM - pdm1978@gmail]
Opinion:
1. Section 56 (2)(vii) specifies the following receipt taxable as income: (vii) Where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,-
a) Any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
b) Any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property ;
c) Any property, other than immovable property,-
i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;
ii) for a consideration which is less than the aggregate fair Market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:Based on certain set of normal presumption as to the Employee Welfare Trust, we are of the considered opinion that the difference between the fair market value and the purchase price would be taxable as “Income from Other source”.
2. The fair market value so adopted above would be taken as your cost whenever subsequently you sell the share [Section 49(4)]
3. The income would also be subject to advance tax payment provision.
Query 2]
I have taken a loan of Rs. 3 Lacs at 9% p.a interest from a co-operative society for educational purpose of my daughter. Later on, since my daughter did not procure admission, I made a fixed deposit of the amount in a bank at 9.5% p.a. interest. Now, what will be the taxable portion of interest? Will it be
1. Interest received (-) Interest paid or
2. Entire amount of interest received?[Dr. Jacob Sakariah-jacobsakariah@hotmail.com]
Opinion:
Net amount of Interest (i.e., Interest received Less Interest paid) will be taxable.
Query 3]
We are the Central Government Employee. We wants yours advise on Following points .
In Financial year 2009-10, we have availed Tax Rebate u/s. 89. Afterward, Income Tax Department had asked for explanation from our Disbursing officer. Our Disbursing officer deducted and deposited the amount in bank without our consent. Now our query is that how we can get back our deducted amount? What is the proper channel for the same? Please advise us. [J N V kanhiwada, Seoni -sarafaraj_hcet@rediffmail.com]
Opinion:
It appears that the amount of tax pertaining to the F.Y. 2009-10 has been recovered from your salary & the amount so deducted has been paid by the Disbursing Officer to the Government Treasury by way of TDS. The Disbursing Officer must have also filed the revised TDS return showing the revised TDS amount. You may ask the Disbursing Officer to issue the fresh Form No. 16 with above total TDS Amount (i.e., showing earlier as well as current deduction). With the Revised Form No. 16 so received & working of deduction u/s 89, you may file the revised return claiming the refund of excess TDS. The process of getting refund may be cumbersome, & time consuming. But you can get the refund of the excess amount of Income Tax paid on your income for the relevant year.
Comments
Post a Comment