Fire your tax related queries and i would get it solved!!!

[diosys]

1 more question

I have liabilities related to house buy of around 6lakhs in my balance sheet

From last year onwards my dad have transferred our business on my name on proprietorship

Now we have our current account on our shop name

I wanted to know can i pay cheque from that account(to clear my old liabilities of 6 lakhs) and delay payment of lenders for business ?
if yes
ALso can a person by cutting cash memo instead of directing that amount to bank pay to the liability lender directly? or is it necessary to transfer it to the account first than cut a cheque?

For both the questions the answer is YES

 

[kram1971]

Reg. tax implications due to abolition of FBT

Hi,
Seek your valuable inputs. Thanks for taking time to read this.

Situation: I have a company leased car. I pay for the car monthly (EMI of
28K from pre-tax salary). The understanding when I leased the car in Feb 2007 was that I can own the car at the end of lease period (3 years) by paying residual value (10%). In my case that turns out to be 65K. It was all fine till the Govt came up with the abolition of FBT few months back.
Our finance dept is coming back saying that, I can no longer get the car at 65K. Indeed they are saying I might have to pay about 1 Lakh tax (that too before end of March 31). I am now faced with 2 options:

1. Ask the company to take the car and I do not want to pay 1.65 lakhs for a 3 year old car.
2. Pay the 1.65 lakhs thereby pretty much nullifying whatever benefit I got by going for a company leased car.

This whole experience is painful because I am convinced our finance dept is not interpreting the law correctly or the tax dept is at fault. They cannot apply rules retrospectively as I would have never gone for the lease if I knew I would be liable for 1 lakh tax in 2010.

Pls advise

 

[magnet]

For both the questions the answer is YES

IF for part 2 also answer is yes...what is the proof of reduction in liability section ? There has to be an entry na in passbooks(statement) or what paper need to be prepared ?

 

[diosys]

Re: Reg. tax implications due to abolition of FBT

Hi,
Seek your valuable inputs. Thanks for taking time to read this.

Situation: I have a company leased car. I pay for the car monthly (EMI of
28K from pre-tax salary). The understanding when I leased the car in Feb 2007 was that I can own the car at the end of lease period (3 years) by paying residual value (10%). In my case that turns out to be 65K. It was all fine till the Govt came up with the abolition of FBT few months back.
Our finance dept is coming back saying that, I can no longer get the car at 65K. Indeed they are saying I might have to pay about 1 Lakh tax (that too before end of March 31). I am now faced with 2 options:

1. Ask the company to take the car and I do not want to pay 1.65 lakhs for a 3 year old car.
2. Pay the 1.65 lakhs thereby pretty much nullifying whatever benefit I got by going for a company leased car.

This whole experience is painful because I am convinced our finance dept is not interpreting the law correctly or the tax dept is at fault. They cannot apply rules retrospectively as I would have never gone for the lease if I knew I would be liable for 1 lakh tax in 2010.

Pls advise

Please clarify the exact facts of the case...

The car cost as you say is 6.5 Lacs (10% is equal to .65L you said) and you paid 28K per month for 3 years....that itself is more than the car cost...

 

[diosys]

IF for part 2 also answer is yes...what is the proof of reduction in liability section ? There has to be an entry na in passbooks(statement) or what paper need to be prepared ?

proof is the debits appearing in the loan account from a third party...no bigger proof is required if a third party confirmation is given.

 

[kram1971]

This pertains to the FBT query on leased car.

Sorry for being sketchy on the exact numbers as I felt the real issue on the "rightfullness" of demanding tax retrospectively, if the affected person would have taken different decision, if he knew he would be liable for tax than the accuracy of the numbers, itself.

Nevertheless, here are the details:

1. The invoice price of the car is 6.55 lakhs
2. On road price is 7.5 lakhs. I added few accessories making it a 8 lakh rupee car.
3. While buying, I had the following options:
- Finance 6.5 lakhs paying from post tax salary (obviously i had to pay 1.5 lakhs as my contribution). The best deal I was getting was 19 K EMI for 36 months ( 684000 total outflow) if I finance 6.5 lakhs.
- Option 2 was Finance 7.5 lakhs but as a company lease car. The best deal I got here was 28K monthly EMI for 36 months (10 lakhs total outflow).

Being in 30 percent tax bracket, roughly 3.6 lakhs of this 10 lakhs was anyway tax money. Plus, I was putting just 50 K (accessories) as compared to 1.5 lakhs in scenario 1.

On top of this, being a leased car, Insurance was covered by the employer. Thus, I felt, I was getting a good deal.

Now, it appears, I need to pay about 1 lakh in taxes as per our finance manager.
Hope this clarifies the situation

 

[diosys]

This pertains to the FBT query on leased car.

Sorry for being sketchy on the exact numbers as I felt the real issue on the "rightfullness" of demanding tax retrospectively, if the affected person would have taken different decision, if he knew he would be liable for tax than the accuracy of the numbers, itself.

Nevertheless, here are the details:

1. The invoice price of the car is 6.55 lakhs
2. On road price is 7.5 lakhs. I added few accessories making it a 8 lakh rupee car.
3. While buying, I had the following options:
- Finance 6.5 lakhs paying from post tax salary (obviously i had to pay 1.5 lakhs as my contribution). The best deal I was getting was 19 K EMI for 36 months ( 684000 total outflow) if I finance 6.5 lakhs.
- Option 2 was Finance 7.5 lakhs but as a company lease car. The best deal I got here was 28K monthly EMI for 36 months (10 lakhs total outflow).

Being in 30 percent tax bracket, roughly 3.6 lakhs of this 10 lakhs was anyway tax money. Plus, I was putting just 50 K (accessories) as compared to 1.5 lakhs in scenario 1.

On top of this, being a leased car, Insurance was covered by the employer. Thus, I felt, I was getting a good deal.

Now, it appears, I need to pay about 1 lakh in taxes as per our finance manager.
Hope this clarifies the situation

So if i understand the thing correctly is that your company bought this car on your behalf and leased it out to you for 28K per month....

If i have understood this correctly then the cost of the car is 7.5 lacs which after three years was to be trfd to you for 75K...

According you would need to pay no tax since the money recovered from you by the company is greater than the cost of the car hence there would be no perquisite which become taxable in your hand.

Why i am not going into the legality of retrospective amendments is because the supreme court itself has yet not been able to make sure what is retro and what is not....so there is no point dwelling into it.... for your sake i am appending the perquisite valuation rule for your reference.

"Actual cost of asset to the employer less the cost
movable asset of normal wear and tear and as further reduced
by the amount, if any, paid or recovered from the
employee. The cost of normal wear and tear is
calculated at 10% of cost for each completed year
during which asset was put to use by the employer
(normal wear and tear is calculated at 50% in the
case of computers and electronic items and 20%
in the case of motor cars by the reducing balance
method)."

 

[Navj29]

I am a 82% physically disable person. My only source of income is online share trading. Can i receive tax benefits on short term capital gain? If yes, how?

 

[diosys]

I am a 82% physically disable person. My only source of income is online share trading. Can i receive tax benefits on short term capital gain? If yes, how?

you can avail a deduction of maximum 75000 under 80-U

 

[wattax]

This thread just gets better day by day, so many doubts clarified before I even encounter them myself

But still, a few doubts persist...

1) I'm not sure if the term is correct, but can I calculate taxable income of my futures trading simply by subtracting the "opening stock"(bank/broker balance on april 1st) from the "closing stock"(latest bank/broker balance)?

I ask because, I know it's business income and I can therefore deduct brokerage, STT and service tax(is that correct?) as business expenses. And the formula for deduction I believe is:

raw profit - raw loss - brokerage - stt - st - stamp duty - other business expences = actual profit or loss

But isn't that the exact formula the broker uses to calculate my daily "closing stock/balance"? Can I take a shortcut and just calculate using the broker's values?

2) My past auditor has made a mistake in not declaring MFs and govt bonds in previous balance sheets. Since these go all the way back to the Saral days, my current auditor says it's impossible to revise those returns. His suggestion is quite weird(next point), but what would you recommend I do?

3) My current auditor says that balance sheets aren't even required! He says that just paying the IT based on my income(minus any deductions) is enough. That sounds very strange to me, more so because I might fall under the 40L audit bracket.

Thanks in advance