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With divorce comes hand in hand another concern known as Alimony and its taxability. While divorce is the legal method of putting a relationship to an end, usually monetary compensation is provided to the financially weak party by the financially stronger one for them to maintain the same standard of living after separation. The term used for such compensation is “Alimony” which is a legal obligation in most countries. In our country alimony is governed according to the personal laws and the provision of the Special Marriage Act. Another law regarding alimony is laid down in section 125 CrPc. It talks about alimony rights to wife given by the husband. Section 125, along with several other alimony rights, grants the right of Interim maintenance also. The Supreme Court in several of its judgment has made it clear that interim maintenance can be awarded before the final disposal of a case. Though there is no specific provision in the Code regarding interim maintenance judicial activi...

Inflation can change the political scenario of a country. But what exactly is inflation in simple terms? Let’s take an example to understand inflation better – Often, the price of a commodity increases over time which leads to fall in purchasing power of money i.e. if 7 items can be bought for INR 700 today, tomorrow you may be able to buy only 5 items at the same price on account of inflation. This brings us to the tax jargon i.e. Cost Inflation Index (‘CII’), which calculates the estimated rise in the cost of goods and assets year-by-year as a result of inflation. What is the significance of CII and Indexation? It is used for computation of Capital Gains and related taxes. If the index is not used, the inflated prices increase your gains and more gains result in increased tax liabilities. Therefore, the use of CII is beneficial for a taxpayer. The entire process of adjusting the cost price of a capital asset with the effect of inflation using the CII number is referred...

Refund refers to any amount that is due to the taxpayer from the administration owing to excess payment of taxes or any other reason. In the current GST regime, the entire refund process has been clearly defined in law. It aims at keeping the issues due to which refund arises at a minimum level with the help of higher compliances and self-regulating mechanism. Scope of Refund i.       Refund of taxes paid as per GST tax rates in India on zero-rated supplies ii.     Refund of taxes on Inputs or Input Services used in making zero-rated supplies iii.   Refund of taxes on the supply of goods regarded as deemed exports iv.   Refund of the unutilized input tax credit (ITC) as provided u/s 54(3) i.e. due to inverted duty structure. Further, there could be various other situations wherein refund can be granted to the registered person as per the refund provisions. Taxpayers who export goods or services can choose any of the f...

Introduced by the Finance Act, 1994, the Section 194-I emphasizes that an entity, whether an individual or H.U.F. who receives rental income is liable for a tax deduction at source (‘TDS’) when the income credited is more than Rs.1,80,000 during a financial year. Definition of ‘Rent’ in regard to section 194I? Any payment under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any – land, building (including factory building), land appurtenant to a building, machinery, plant, equipment, furniture or fittings whether owned by the payee. Unlike the advance rent, no tax is to be deducted on refundable security deposits u/s 194I. Moreover, where any such rent is credited to ‘suspense account’ or to any other account shall also be liable to TDS. At what point TDS is to be deducted? One should deduct TDS and pay tax direct online at the time of credit of rental income to the payee’s account or at the time ...

Across the world many corporations, particularly multinational organizations, now favour ESOP (employee stock ownership plan) as a preferred mode of employee compensation. Unlike the regular salary that the employee draws periodically, this is an in-kind benefit that allows the employee to own a part of the company (in the form of stock ownership) either while undertaking employment or as part of regular reimbursement. This gives the employee a personal interest in the business and maintains the corporate culture in the company. Similar to the ESOP, many corporations also award their employees SAR or Stock Appreciation Rights. These may be declared from time to time as incentives or as bonus. Usually the employee is allocated stock options of the company (at current market value) and can be redeemed anytime after a year (till the period of employment or within any other term specifically mentioned). This means that the amount of appreciation of a specific number of shares of t...

Income Tax is a direct tax on any income earned by a person during a financial year. An individual is supposed to file a return of income and pay taxes on the same by 31 st  July of the next year. Paying taxes always seems like a burden to the common man. However, the issue synonymous to both  Direct and Indirect Taxes  that must be addressed is Chapter VI of the Income Tax Act, 1961 has offered a variety of deductions to lessen the tax burden. A few of the major deductions enlisted under Chapter VI are presented as follows in accordance with the recent updates. It is notable that these deductions cannot exceed the Gross Total Income of the individual. Section Description Maximum Deduction threshold 80C Contribution to LIC, RPF, NSS, Tuition fees, principal repayment for purchase/construction of residential house, Sukanya Samridhi Account, ULIPS/ELSS, 5-year FD, Subscription to NABARD Bonds 80C + 80CCC+ 80CCD (1) should be l...

The Direct Taxation system in India is one of its kinds and includes its fair share of interesting and complex provisions and sections to be reckoned with. The concept of Advance Tax being one such provision includes depositing tax on income in advance by estimating the projected earnings for the year and then paying taxes accordingly on time-bound intervals instead of lump sum payments at year-end. Section 208 of the Income Tax Act, 1961 includes the provisions pertaining to Advance Income Tax which stipulates that where total income tax liability is greater than INR 10,000 then tax is to be deposited under Challan 280 via online or offline mode with designated banks to the Income Tax Department. Interestingly, the concept of paying taxes online in India is on the rise as more than 85% of transactions are now done online. The concept of Advance tax has been helping both the government and the taxpayers as there is a lesser chance of default in tax payments and collections w...