Tax Talk- June 28 :: Business Line

I worked in three different organisations for the financial year 2012-13 for 6 months, 1 month and 5 months, respectively. My total income for the financial year was Rs 3.2 lakh. I had to pay Rs 2 lakh as bond amount for getting relieved from the second company. Will I get tax exemption for the amount paid as bond money? I used my savings from the previous employer to pay the amount.

- Albert

The bond payment of Rs 2 lakh made to your employer in lieu of getting relieved from the employment is an expense for you. Your income will be computed under the head ‘Income from Salary’ from three employers and you cannot deduct the amount of Rs 2 lakh against your income, as no specific deduction in this regard is prescribed under the Income-tax Act, 1961.

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I have some shares of an unlisted company issued to me about 8 years back. They are on demat with NSDL.

I plan to sell them off market to some party. An individual has offered me a price of Rs 80 lakh. A listed company is also offering to purchase them at about Rs 1 crore. What are the capital gains tax dues on these shares?

Is there any difference in tax dues if sold to a listed company and a private individual?

If I finalise a deal, what are my responsibilities to the Income Tax department?

- Col Devidas

We understand that the shares of the company are unlisted, hence the deal will be through an off market route as they cannot be traded on a recognised stock exchange. Under the prevailing tax laws, any unlisted share which is held by the assessee for more than 12 months preceding the date of its transfer is a long term capital asset and capital gain from transfer of unlisted shares will be chargeable to tax at the special rate of 20 per cent (excluding Education cess and Secondary and Higher Secondary Education cess).

In case of a resident individual, the calculation of the capital gains and the rate at which the same are taxed under the provisions are unaffected by the status of the purchaser (i.e. individual or a company).

Once you have earned the capital gains, the obligations under the Income-tax Act, 1961, are as follows:

a) Deposit the tax on the capital gains so arisen with the tax authorities by the specified due dates.

b) Include the details of such transaction in the tax return for that financial year.

You may claim exemption from payment of tax on the capital gains so arisen by investing in a specified asset/securities provided the you meet the conditions mentioned for claiming such exemption.