On Diwali, my employer gave me a cash bonus of R15,000 and a gift voucher of R5,000. Is the bonus taxable? —Vishwavir Patil
Under Section 17 of the IT Act, salary, including bonus from the employer, is taxable as income from salary in the hands of the employee. Accordingly, the R15,000 cash bonus will be taxable in your hands. However, the R5,000 gift voucher will not be taxable in your hands.
I purchased a house last month with a home loan from SBI. I am paying EMIs to the bank. Can I claim the EMI payments as investment benefit under Section 80C? —Narayan Rao
The EMI consist of two components — principal and interest. The principal component qualifies for deduction under Section 80C as repayment of housing loan. Further, the amount paid as stamp duty and registration charges at the time of purchase will be eligible for deduction under Section 80C. Furthermore, you can claim interest expenses actually paid, subject to a maximum of R2,00,000, as loss from house property. The income from house property can be deducted from income from salary while computing the taxable income.
I want to gift my wife certain bonds that I own. She does not have any other income. Will the interest income from these bonds exempt in her hands?—Vimal Ahuja
Any sum of money received without consideration, i.e. gifts, in excess of R50,000 in a year by an individual or HUF is liable to income tax under Section 56(2)(vi) of the I-T Act. However, exemption is given on gifts received from the spouse. As such, the bonds will not be taxed in your wife’s hands. However, the income accruing on the bonds, i.e., interest, will be clubbed in your hands for tax under Section 64(1)(iv). Note that, as held in the case CIT vs MP Birla [1983] 142 ITR 377, interest income, if any, from a subsequent bonus issue on such bonds will not be clubbed in your hands as there is no transfer of bonus units from you to your wife.
During FY14, I spent on the medical treatment of my 80-year-old father, who suffers from low vision. My father gets rental income and interest on fixed deposits. Can I claim deduction under Section 80DD? —Girish Ramachandran
One of the conditions for claiming deduction under Section 80DD is that the person on whom the taxpayer has incurred expenditure for medical treatment should be dependent, wholly or mainly, on such individual.
In your case, your father has his own source of income in the form of rent and interest. Thus, if such income is sufficient for your father’s maintenance, you will not get the deduction under Section 80DD. However, your father can claim a deduction of R50,000 (R1,00,000
in case of severe disability) under Section 80U, provided it is certified by a medical authority.
I work with a private company and am planning a vacation in Mauritius, along with my wife and daughter. The trip is expected to cost
me R1,00,000, including travel costs. I am entitled to an LTA of R75,000. How much can I claim as exemption? Which documents need to be submitted for this purpose? —Nitin Chopra
Leave travel exemption is subject to the expenses actually incurred towards travel in India. As such, you will not be able to claim
LTA exemption.
By Suresh Surana
The writer is founder of RSM Astute Consulting Group
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