Back Which is better, FDI or FII?
Which one is good for the country — FII or FDI?
Deepak, email
Undoubtedly, FDI (foreign direct investment) as it is more durable and committed, if one may say so, than FII (foreign institutional investment) which is footloose and hot. China has been fortunate in attracting huge FDI. All these years, India has been fortunate in attracting FII, which made our stock exchanges popular, but not FDI in a big way. But, of late, there is a discernible trend in this changing and, in fact, last year FDI was marginally higher than FII.
Avoiding tax on LTCG
I have earned long-term capital gain on transfer of unlisted shares of a company, which is chargeable to tax at 20 per cent. If I invest the entire sale consideration in a residential house, I will be saving the tax.
My question is that if I book a residential house with a builder under an agreement for sale before due date of filing of I-T return by investing only around 10 per cent of the sale consideration as booking amount and the remaining is paid in installments the next two years as per the agreement for sale.
The possession of the property will be available after two years. Would I be eligible to get the exemption under Section 54F for full sale consideration?
If not, what will be tax position in this scenario?
Om Prakash Aggarwal, email
You are fulfilling all the conditions prescribed by Section 54F for being eligible for exemption from long-term capital gains from unlisted shares, except the fundamental one — you have not opened an account under Capital Gains Account Scheme 1988 in earnest of your intention to buy or construct a house within the prescribed period.
This you should do before filing the return so that you can attach the required proof of having earmarked the amount for house construction. The amount so deposited under the Capital Gains Accounts Scheme cannot be diverted for any other purpose and if you do so you have to pay tax on the amount so diverted. Therefore, please open this account and deposit the remaining 90 per cent therein and attach the receipt given by the bank with your income-tax return.
Registrar and transfer agent
I want to become a registrar and transfer agent. How to go about it and where to apply?
Sobby, Thrissur
To the best of my knowledge, there are no statutory drills to be gone through. You must be able to convince individual companies of your infrastructure and capability. This is a species of outsourcing routinely resorted to by companies these days as a cost-saving technique. You should be able to deliver on this count, which is possible only if you have a large-enough client base. There are already big guns around and you should be able to undercut them, to put in mildly.
Salary increment as perks
A public sector company has provided staff quarters for which licence fee is payable by the occupants. The company has been adding 20 per cent of salary as perks to the taxable salary of the employees concerned. Is this correct?
Mashkoor Mohiyddin, email
I think the company is right because it is only in the case of employees of the Central or State governments either serving such governments or undertakings under their control, the taxable value is the licence value as reduced by the amount contributed by the employee. Employees of public sector companies do not make the grade under this dispensation. Instead they are bracketed with private sector employees. The only mistake done by the company is it has not deducted the licence fee paid to the company by the occupants from the value of the house before adding it to the taxable salary.
Education loan
I have taken an education loan whose interest amounts to Rs 25,000 per annum. Will I get income-tax rebate on the Rs 25,000 under Section 80E in addition to the amount of Rs 1,00,000 under Section 80C?
Chinmaya Mishra, Kolkata
Deduction under Section 80E is to the student who pays interest on an education loan for higher studies. This you would be entitled to if you satisfy the conditions set out in the section. But deduction under Section 80C is to the parent in respect of tuition fees he/she pays in respect of the children.
However, you would get deduction under Section 80C in addition to the one under Section 80E if you have made other savings or investments qualifying for deduction thereunder. For example, if you are paying tuition fee of your children in addition to the interest on education loan, you make the grade for the former under Section 80C and for the latter under Section 80E.
Salary paid as incentive
My employer did not pay salary for two months but later on paid the same as incentive but in the TDS calculations, he has included full twelve months salary as well as the incentive. Is he right?
G. D. Singh, email
Apparently not and I haven’t the faintest idea why he has done so because showing salary as incentive does not give any tax advantage to either of you. Maybe he has held back the salary and will pay you later on. In that case, he is right because salary is taxable on due basis no matter whether it has been paid or not.
S. MURLIDHARAN
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