Tax issue mars LPG subsidy

New Delhi, May 4: Taxability of LPG subsidy and other direct benefits paid directly into bank accounts of beneficiaries is unclear with tax experts divided on the issue and want an explicit clarification from the government.

Finance Bill, 2015, as passed by the Lok Sabha last week, has expanded the definition of income, that is taxable under the Income Tax Act, 1961, by inserting a sub- clause on subsidies, grant, cash incentive and duty drawback. Tax experts are, however, divided if the insertions mean that assesses will have to pay tax on subsidies they receive in their bank accounts.

According to the amendments to the Bill, the income shall include “assis- tance in form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement by the central government or state government or any authority or body or agency in cash or kind to the assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset”. Pw C leader ( Direct Tax) Rahul Garg said, “LPG subsidy, strictly speaking, would be hit by the new law unless it is clarified.”