The employees can also claim Leave Travel Concession (LTC) twice in a block of four years, subject to certain conditions

Can you tell us about the amendments in respect of investment in capital gains bonds? 

 At present,an assessee can claim deduction upto Rs 50,00,000 from Long Term Capital Gain (LTCG) on the sale of any capital asset by making an investment in specified bonds under section 54EC of the Act within six months of the date of sale. There is a lock-in period of three years for such investments. Now, under the amended provisions, which is effective from the financial year 2018-19 relevant to assessment year 2019-2000, the benefit of Section 54EC can be claimed only if the LTCG is from the sale of immovable property, i.e. land and building, or both. The effect of this amendment will be that the benefit of Section 54EC will now not be available in respect of LTCG arising on or after April 1, 2018 in respect of sale/transfer of shares, units of mutual fund, goodwill, compensation received on surrender of tenancy rights or other movable assets. Under the amended provisions, the lock-in period for these investments will now be five years instead of three years. 

I am an individual and resident of India. I own one house property in Australia which I have given on rent. The gross yearly rent is 36,000 Australiandollars. After paying taxes and certain expenses relating to this property, the net rental income in my hand is 20,000 Australian dollars. I have also paid tax in Australia on this income. Kindly let me know whether I have to offer gross income or net income in my Indian Income Tax Return? Whether I am entitled to credit for the taxes paid in Australia and, if yes, then what is the amount? 

 Under Section 5 of the Income Tax Act, a resident Indian is liable to pay taxes on his global income. Accordingly, you are liable to paytax on rental income received in Australia. Further, the amount of income chargeable to tax in Australia is to be offered for tax in India. Therefore, if 20,000 Australian dollars is the taxable income, then you have to show 20,000 Australian dollars in India as your income. However, you will not get any further deduction on this payment. 

Yes, you are entitled for credit of taxes paid over there. However, tax will be calculated proportionately as mentioned in Section 91 of the Income Tax Act. 

I am an employee in a listed company in India. A dispute has arisen with the employer on modification of terms and conditions of my employment. Finally, the employer has terminated the contract of employment on payment of compensation of Rs 10 lakh.Please tell me whether this compensation is taxable, and if yes, whether it is taxable as ‘salary income’ or ‘income from other sources’? 

 From the financial year 2018-19, the compensation received on termination of employment is now taxable. A new clause (xi) has been inserted in Section 56(2) of the Income Tax Act from the Assessment Year 2019-2020 to provide that any compensation received by any employee on termination or modification of terms and conditions of the contract of employment on or after April 1, 2018 shall be taxable as ‘income from other sources’. 

I am an individual having major source of income from salary. Can you suggest any tax free perquisite available to salaried persons, particularly when transport allowance and medical reimbursement perquisites have been withdrawn? 

 Withdrawal of transport allowance and medical reimbursement will not have any impact on the calculations of tax liability as, in lieu of these two allowances, the government has allowed every employee standard deduction of Rs 40,000 per year. This deductionis absolute and unconditional and does not require any supportingevidence. Interestingly, it is available to all the employees, irrespective of the salary drawn. The standard deduction of Rs 40,000needs to be considered as deduction in respect of every taxable salaryfor FY2018-19. 

The perquisite in respect of telephone/mobile charges paid is not taxable in the case of employees. 

Further, fixed education allowance given by the employer to the employees to meet the cost of education of family members of the employees is not taxable to the extent of Rs 100 per month per child (maximum two children).
Gift vouchers up to Rs 5,000 as well as computer or laptop provided to employee are not taxable.House rent allowance also is an exempted perquisite, subject to certain amount. 

The employees can also claim Leave Travel Concession (LTC) twice in a block of four years, subject to certain conditions. Otherwise, all the amount received, either by way salary or perquisite, is taxable in the hands of the employee.