WARN­ING: Do not club your in­come

Consumer Voice - - BFSI Guide -

Trans­fer­ring a part of your in­come to the spouse or a mi­nor child who has a mea­gre or no tax­able in­come is be­ing watched by in­come tax of­fi­cials. If you are show­ing a part of your in­come as in­come of your spouse, child or any­body else, you are not do­ing the right thing. Any in­come aris­ing to your spouse or daugh­ter-in-law from an as­set trans­ferred to him/her with­out ad­e­quate con­sid­er­a­tion will be clubbed in your hands. For in­stance, the rent re­ceived by your wife from a house prop­erty you gifted her will be taxed as your rental in­come. This pro­vi­sion, how­ever, will not ap­ply if the as­sets are trans­ferred with an agree­ment to live apart. Any in­come (salary and com­mis­sion) aris­ing to the spouse from any con­cern, be it a pro­pri­etor­ship con­cern, part­ner­ship firm or com­pany in which the in­di­vid­ual has sub­stan­tial in­ter­est, will be clubbed in the hands of the in­di­vid­ual and will be taxed ac­cord­ingly. How­ever, in cases where the spouse pos­sesses tech­ni­cal or pro­fes­sional qual­i­fi­ca­tion, and the in­come is at­trib­ut­able to the ap­pli­ca­tion of such tech­ni­cal or pro­fes­sional knowl­edge and ex­pe­ri­ence, club­bing pro­vi­sions do not ap­ply. a de­duc­tion of Rs 60,000 or the amount ac­tu­ally paid (whichever is less) will be avail­able.

Ex­pen­di­ture must be ac­tu­ally in­curred by res­i­dent him­self or de­pen­dent rel­a­tive for med­i­cal treat­ment of spec­i­fied de­cease or ail­ment. The dis­eases have been spec­i­fied in Rule 11DD. A cer­tifi­cate in Form 10 (I) is to be fur­nished. Re­lief for salary ar­rears/ad­vance un­der Sec­tion 89 (1) Re­lief un­der Sec­tion 89 (1) is avail­able to an em­ployee when he re­ceives salary in ad­vance or in ar­rears, or when in one fi­nan­cial year he re­ceives salary of more than 12 months (when wage set­tle­ments/ pay­ments take ret­ro­spec­tive ef­fect), or re­ceives ‘profit in lieu of salary’ cov­ered un­der Sec­tion 17 (3). Re­lief un­der Sec­tion 89 (1) is also ad­mis­si­ble on fam­ily pen­sion.

Th­ese are only a few sec­tions re­lat­ing to tax ex­emp­tions which we have dis­cussed here. There are many more of them re­gard­ing dona­tions and phys­i­cal/ men­tal dis­abil­ity which are of­fered to spec­i­fied in­come groups, avail­able to any­one who is keen to avail the tax ex­emp­tions.

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