Query No. 1: Effect of demonetisation
Can a person accept notes of Rs. 500/- or Rs. 1,000/- after November 8, 2016?
After midnight of November 8, 2016, notes of Rs. 500/- or Rs. 1000/- cease to be a legal tender, and therefore no person would accept the said notes except some places, wherein they have been considered as legal tender till the Government notifies i.e. at petrol pumps, hospitals, medical stores etc. So no person can raise a bill for supply of goods or services on or after November 8, 2016 for accepting notes of Rs. 500/ or Rs. 1,000/-.
Query No. 2: Taxability of world income in the hands of resident
I am QNET agent. Till last year I have filed my service tax return and income tax return as TDS on commission was deducted and appeared in form 26AS. Now, I have changed my agency base from Mumbai to Dubai and therefore a company is not deducting tax at source on commission, as the same is not chargeable tax in Dubai. So my question is whether the same is chargeable in my hands in India, as I am resident in India as per section 6 of the Income-tax Act.
As querist himself admits that he is resident of India as per section 6 of the Act. So as per section 5, in the hands of resident, all income from whatever source derived would be included in the total income of such individual viz.
a) Is received or is deemed to be received in India;
b) Accrues or arises or is deemed to accrue or arise to him in India; or
c) Accrues or arises to him outside India.
Thus, reading section 5 of the Act, it is clear that in the hands of resident Individual world income is taxable, particularly when, section 5(1)(c) specifically includes in the hands of resident “income accrues or arises to him outside India”.
Query No. 3: Gift to HUF by uncle
Can I accept gift from my father’s own younger brother for my HUF consisting of myself, my wife and children?
There is no restriction from accepting gift from your real uncle (your father’s younger brother) for your HUF consisting of yourself, your wife and children, but the same would be taxable in the hands of your HUF. Section 56(2)(vii) exempts gift received from any member of HUF. As your uncle is not a member of your HUF, gift received from your uncle by your HUF is taxable.
Query No. 4: TCS on Immovable Property
Whether TCS is applicable on sale of immovable property above Rs. 50/- lakh?
Section 194-1A of the Act provides that if consideration for transfer of an immovable property is Rs. 50/- lakh or above, a person being a transferee (purchaser) is responsible for paying to a resident transferor (seller) any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall at the time of credit of such sum to the account of the transferor (seller) or at the time of payment of such sum in cash or by issue of a cheque or drafts or by any mode, whichever is earlier deduct an amount equal to @ 1% of such sum as income tax thereon.
Query No. 5: Taxability of LIC Policy
If a policy holder pays premium more than 10% of the sum assured, can he claim deduction under section 80C of the Act? When amount is received, how it would be taxed?
Section 80C provides that an assessee, being an Individual or HUF shall be allowed a deduction from gross total income of an amount not exceeding Rs. 1,50,000/- in respect of amount paid or deposited in the previous year in the specified savings listed in section 80C(2) of the Act. One of amount for which a policy holder is entitled for deduction is amount deposited to effect or to keep in force an insurance on the life of the policy holder. However, as per section 80C(3A) only premium paid on insurance policy which is not in excess of 10% of the actual capital sum assured, is allowable for deduction.
Similarly, under section 10(10D) of the Act, sum received under a life insurance policy including the sum allocated by way of bonus on such policy is not liable to be included in the total income, whose premium during the term of the policy did not exceed 10% of the capital sum assured.
So, premium paid over 10% of the capital sum assured will not be allowed as deduction under section 80C of the Act and sum received in respect of the policy whose premium during the term of policy exceeded 10% to the capital sum assured would be liable to tax.
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