Unspent LTC is taxable
QI am an engineer working in a private firm getting a monthly salary of `90,000. I have two children studying in primary school. I am spending money `75,000 per year as a tuition fee. How much maximum tuition fee exemption is allowed as per IT rules. Please clarify. RAM BABU Via email A) According to Section 80C, any sum paid by an individual, as tuition fees, whether at the time of admission or thereafter to any university, college, school, or other educational institutions situated within India for the purpose of full time education of any two children. This benefit is only for the amount of tuition fees for full-time education and will not include any payment towards development fees or donation or payment of similar nature and payment made for education to any institution situated outside India. It is pertinent to note that deduction for tuition fees is subject to overall limit of `1.5 lakh.
QIf a house was sold 10 years after its construction to avoid long-term capital gains tax, should the total sale value to be invested in NHAI bonds or only the amount of gains arrived at using inflation index? CHANDRESH Via email (A) According to Section 54 EC, the capital gains (after indexation), arising from the transfer of a long term capital asset, will be exempt if the assessee invests such gains within six months from the date of transfer or sale in the capital gains bonds of National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC). It is pertinent to note that the amount of investment in these bonds cannot exceed `50 lakh.
QMy bank permits Leave Travel Concession (LTC) once in two years to native place and once in four years to any where in India as per eligible mode of transport. In my case, it is by flight. We are also permitted to travel abroad under LTC. I travelled by train second class from Coimbatore to Hyderabad and visited Mauritius with family. My travel claim was settled with the eligible amount which works out to `69,700. My travel cost in India is `14,500 only. My bank however, made the difference of the amount i.e. `55,200 as taxable and I had to pay income tax of `17,057. Is it correct? SHYAM MOHAN
Via email A) Your employer is fully justified in treating the sum of `55,200 as taxable income. Section 10(5) of the Income-Tax Act provides that “exemption in respect of value of any travel concession or assistance received by an employee from his employer for himself and his family in connection with his proceeding on leave to any place in India”. Further, your attention is drawn to the proviso to the above sub section, which clearly states that the amount exempt under this clause shall in no case exceed the amount of expense actually incurred for the purpose of such travel. In your case, admittedly your employer paid an amount of `69,700 in respect of such travel while the cost incurred by you for travel in India was only `14,500. Hence, the excess amount will be taxable. (The writer is a chartered accountant. You can your send queries to info@rathiandmalani.com)