Summary of this article
- The employer is required to deduct tax at the average rate every month.
- Even after partition, the proportionate share of the gifted asset allotted to your wife will be subjected to clubbing.
- You cannot get a loan for the same property from two banks.
My salary is Rs 50,000/-, fixed, on which the employer deducts a flat 10%. Is it right? At what rate is an employer allowed to deduct TDS?
Tax on salary is not deducted at a fixed percentage of the money being paid, like in the case of interest, brokerage, rent, fee, etc. The amount of tax to be deducted every month from salary is determined on the basis of the total taxable salary expected to be earned by the employee during the financial year. Based on the tax liability calculated for the whole year, the employer is required to deduct tax at the average rate every month. In practice, the amount to be deducted every month is calculated by dividing the total amount of the tax payable for the year by the number of months in which tax is to be deducted.
In case there is a revision in the salary during the year, the amount of tax to be deducted gets revised. From your query, it seems you are treated as a consultant by the company, and the payment is being treated as professional charges; the tax is deducted at a fixed rate of 10%. You are not treated as an employee by the company. In case you are treated as an employee, then the employer is liable to deduct professional tax, employee provident fund contribution, etc., from your salary every month. Please get this confirmation from your employer.
I have obtained a PAN for my HUF after the birth of my daughter. I want to transfer around 5 lakh rupees, the amount of gifts received from family members at the time of my marriage, into my HUF. Can I do that?
Yes, you can do that, but this will not serve any purpose. Since the gifts were made to you on your marriage at the time of your marriage and thus money belongs to you. This transfer will be treated as a gift by you to your HUF for income tax purposes.
Since you are treated as a relative of your HUF, the amount transferred to your HUF and treated as a gift by you to the HUF will not be treated as income of your HUF, but the income generated from such gifts shall be clubbed with your income year after year till the HUF is fully partitioned. Even after partition, the proportionate share of the gifted asset allotted to your wife will be subjected to such clubbing. Please note that the clubbing will apply only to the income relatable to the initial amount gifted and not to the income generated on the income clubbed and invested. Even if the asset is converted into any other form, the clubbing will continue.
I hold an American passport and co-own a property with my father, who holds an Indian passport. I am looking at buying a property in India. For this purpose, I will take a loan in the US to fund 75% of the value of the house. The balance 25% will be funded from a loan in India. I will sell the co-owned property and use the proceeds to close the loan in India within a year. Do we have to pay long-term capital gains on the sale of the old house?
I do not think you will get a loan in the US for Indian property. Moreover, you cannot get a loan for the same property from two banks, as no lender would accept a second charge which is inferior to the first lender.
Section 82 of the Income Tax Act, 2025, provides for a capital gain exemption for individuals and an HUF in respect of long-term capital gains arising from the sale of a residential house property if the long-term capital gains are invested to acquire a residential house property within the prescribed time period.
Even if a residential house is bought within one year prior to the sale of the residential house, the exemption can still be claimed. Since you are planning to sell the old house within one year of the new residential house, you can claim an exemption under Section 82 of the Income Tax Act, 2025.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
