Benami Transactions (Prohibition) Act, 1988

What is Benami property or Benami Transaction?

Any property, whether movable or immovable, tangible or intangible, which has been the subject matter of a Benami transaction, is a Benami property. This would also include the consideration received from such property. Benami property would also include the right or such other document evidencing title or interest in such property.

Benamidar: the other person on whose name the property is shown with or without his/her consent.

Benami Transaction: is a transaction or an arrangement where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person and the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration.

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Tax Saving hints for Salary

   1.       It should be ensured that, under the terms of employment, dearness allowance and dearness pay form a part of basic salary. This will minimise tax incidence on House Rent allowance, Gratuity, Commuted Pension and Employer’s contribution to Provident Fund.

2.       Commission payable as per terms of employment at a fixed percentage of turnover achieved by an employee falls within the expression “Salary”. So that tax incidence on House Rent allowance, Gratuity, Commuted Pension would be lesser if commission is paid at a percentage of turnover achieved by the employee.

3.       As uncommuted pension is always taxable, employees should get their pension commuted. Commuted pension is fully exempt in case of government employee and partly exempt from tax in case of non government employee who can claim relief under section 89.

4.       An employee being member of recognised provident fund who resign before completing 5 years of continuous service, should ensure that he joins a concern which maintains a recognised provident fund for the simple reason that accumulated balance of the provident fund with the former employer will be exempt from tax, provided same is transferred to the new employer, who also maintains a recognised provident fund.

5.       Employer’s contribution towards a recognised provident fund is exempt from tax upto 12 percent of salary, employer may give extra benefit to their employees by raising their contribution to 12 percent of salary without increasing any tax liability.

6.       While medical allowance payable in cash is taxable, provision of medical facilities in certain hospitals is not taxable if some conditions are satisfied. Therefore employee should go in for free medical facilities instead of a fixed medical allowance.

7.       Since incidence of tax on retirement benefits like gratuity, commuted pension, accumulated balance of an unrecognized provident fund is lower if they are paid in beginning of the financial year, employers and employees should mutually plan their affairs in such a way that retirement, termination or resignation, as the case may be, takes place in the beginning of financial year.

8.       An employee should take the benefit of relief available under section 89 wherever possible. Relief can be claimed even in case of a sum received from unrecognized provident fund so far as it is attributable to the employer’s contribution and interest thereon. Although gratuity received during the employment is not exempt from tax under section 10(10), relief under section 89 can be claimed. It should be however, be ensured that the relief is claimed only when it is beneficial.

9.       Pension received in India by a non resident assessee from abroad is taxable in India. If however such pension is first received by or on behalf of  the employee in a foreign country and later on remitted to India, it will be exempt from tax.

10.     As the perquisite in respect of leave travel concession is not taxable in the hands of employees if certain conditions are satisfied, it should be ensured that the travel concession should be claimed to the maximum possible extent without attracting any incidence of tax.

11.     As the perquisite in respect of residential telephone, providing use of computer/laptops, gifts of movable assets (other than computer, electronic items, car) by employer after using for 10 years or more and free refreshments during office hours, are not taxable, employees can claim these benefits without adding to their tax bill.  

12.     Since the term salary include basic salary, bonus, commission, fees and all other taxable allowances for the purpose of valuation of  rent free house, it would be advantageous if an employee goes in for perquisites rather than for taxable allowances. This will reduce valuation of rent-free house.

14.     If rent-free furnished or unfurnished accommodation is provided by the employer at concessional rent, deduction under section 80GG can be claimed if certain conditions are satisfied.


Applicability of Tax Audit U/s 44AB

Tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint. It makes the process of income computation for filing of return of income easier

In a case where a person carries business

The section 44AB(a) says that the person carrying business, would required to get his accounts audited if his Total sales/turnover/gross receipts exceeds Rs. 1 crore in the previous year.

However, that this section shall not be applicable to the person who declares profit under Section 44AD and has the total sales/turnover/gross receipts less than Rs. 2 crore.

So now the question arises that when a person is required to get his accounts audited. The answer to this question is as under.

  • First of all, the person having the Turnover less than 1 crore is not required to get his accounts audit.
  • Secondly, if the turnover exceeds the limit of Rs.1 crore but up to Rs. 2      crore is having an option to avail the benefit of Section 44AD (1) and avoid the audit, if he don’t want to avail the option of Section 44AD (1), then he required to get his accounts audited.
  • Thirdly, the person having the Turnover more than Rs.2 crore is required   to get his accounts audited.

In a case where a person carries profession

The section 44AB(b) says that where a person carries profession is required to get his accounts audited if the gross receipts in the previous year exceeds Rs. 50 lakhs.

The section 44AB (d) says that where a person carries profession, declares profit U/S 44ADA, and declares the profit less than the deemed profit and his total income exceeds the limit which is not chargeable to tax, then he requires to get his accounts audited U/s 44AB (d).

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Form 15G and 15H to save TDS on Interest Income

Individuals with their total income below the taxable limit can submit Form 15H and Form 15G to the bank and ask them to not deduct TDS on the amount of interest. 

The banks in India have to deduct TDS when the interest income of an individual is more than Rs.40,000 a year. The bank includes deposits held in all branches to determine this limit. In case an individual’s total income is below the taxable limit, he/she can submit a Form 15G and Form 15H to the bank to request them not to deduct TDS on the interest amount.

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Double Taxation

What Is Double Taxation?


Double taxation is a tax principle referring to income taxes paid twice on the same source of income. It can occur when income is taxed at both the corporate level and personal level.

Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.

A tax treaty between two or more countries to avoid taxing the same income twice is known as Double Taxation Avoidance Agreement (DTAA). This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country. When a tax-payer resides in one country and earns income in another country, he is covered under DTAA, if those two countries have one in place. DTAAs can be either comprehensive, i.e. covering all types of income or specifically target certain types of income. This depends on the types of businesses/holdings of citizens of one country in another.

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