The quantum exempt will be on the following basis:

For claiming exemption under Section 54F, the amount not invested may be deposited in a specified account known as "Capital Gains Account Scheme". The amount has to be deposited before the due date for furnishing the return of income, in any bank or institution.

The proof of having so invested the same should be furnished along with the return of income.

The amount so invested may be withdrawn for the purpose of purchase or construction of the new asset within the specified time. If within three years from the date of transfer of the original asset, the money is not utilised for the purpose of investment, the same shall be treated as income of the year in which the three-year period from the date of transfer of the original asset expires.

Query

IS REBATE under Section 88C available against long-term capital gains?

Mrs N. Raghavan

Reply

The rebate under Section 88C can be reduced in computing tax even if such tax is on long-term capital gains.

The rebate is available up to a maximum of Rs 5,000 to a woman who is a resident in India and below the age of 65 years at any time during the previous year.

Query

I have invested Rs 2,50,000 in bonds of the Rural Electrification Corporation (REC). I now find that my capital gain, which is long term, is lower than Rs 2,50,000, resulting thereby in an over investment for the purpose of exemption under Section 54EC. Can I utilise the excess invested in bonds of REC against the capital gains that I earn after the date of investment in bonds but before March 31, 2004?

V. R. Narayanaswami

Reply

You will not be able to get exemption in respect of the investment already made in the bonds of REC in respect of capital gains that you earn after the date of investment in the bonds.

Section 54EC requires that the investment should be made within six months from the date of transfer in certain specified bonds for the purpose of claiming the exemption.

This would mean that the investment should be made after the date of transfer and not before and, therefore, you cannot get the exemption.

However, if you withdraw the investment in the form of bonds you will not have any tax implication so long as the withdrawal is only of the excess over which you are claiming exemption.

You may check whether this would be possible under the terms of issue of the bonds.

Query

I have spent some money in carrying on agricultural activities. This has, however, resulted in a loss. Can I set off such loss against other incomes?

Kishnaraj

Reply

You cannot set off the loss against other incomes. Agricultural income is exempt from tax under Section 10(1) of the Act. Since the income is exempt, the loss from such activity will also be ignored.

Query

I am a student and I have been staying in India since my childhood. I, however, earn income by way of tuition fee. My brother sends me money from abroad for my further studies.

Will there will be tax implications on the money sent to me by my brother? Will it make a difference if he sends it to my father instead?

Ravi Gupta

Reply

The sum received from your brother will not be taxable irrespective of whether it is received by you or your father. The tuition fee earned by you will be chargeable to tax if it exceeds Rs 50,000 per annum.

Query

I work for a company and my annual income is Rs 80,000, including the value of all perks. I hold a credit card. Do I have to submit an I-T return? Should I apply for PAN, and, if so, in what form?

Gopalakrishnan N.

Reply

A return needs to be filed by you under the proviso to Section 139(1) by reason of the fact that you hold a credit card. This will be required even if you do not have income, which is chargeable to tax.

The proviso to Section 139(1) lists out six economic criteria and on the satisfaction of any one of the six criteria a return needs to be filed.

This, however, will not apply to a non-resident or a senior citizen (in certain cases), pensioners not engaged in business or profession or on travel to certain neighbouring countries or on a travel to Saudi Arabia or China in connection with Haj or a pilgrimage to Kailash Manasarovar.

You should apply for a permanent account number which application should be in Form No.49A

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.)

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