The Hindu Business Line : Here's an employer giving monthly LTA

SUPPOSING an employee gets leave travel assistance (LTA) on a monthly basis, will he still be entitled to exemption under Section 10(5). Can a person claim the exemption in respect of more than one travel in a year? What is the minimum and maximum number of days for which the travel can be undertaken? Would boarding and lodging expenses be exempt under Section 10(5)? What is the quantum that can be claimed as exempt?

G. Venkatachala Bhaskar

Reply

Even if the LTA is received from the employer on a monthly basis, the employee can claim Section 10(5) exemption. This will be no bar on the claim for exemption, which is available only for one travel in a calendar year and for two such travels in a block of four calendar years beginning from the calendar year 1986. There is no such limit on the minimum and maximum number of days for which travel can be undertaken to claim the exemption.

Boarding and lodging expenses will not be eligible for the exemption. The maximum amount and the other provisions relating to claim of Section 10(5) exemption by an individual assessee are as follows:Value of travel concession or assistance received by an individual from his employer for himself and his family in connection with his proceeding on leave to any place in India,or to any place in India after retirement from service or after the termination of his service shall be exempt.

`Family', for the purpose of this provision means: the spouse and children; and parents, brothers and sisters of the individual wholly or mainly dependent on that individual.

Number of trips: The exemption is available in respect of two journeys performed in a block of four calendar years commencing from calendar year 1986.

Where an individual does not utilise such travel concession or assistance once or on both occasions during any block of four calendar years, the value of travel concession or assistance first taken during the first calendar year immediately succeeding block of four calendar years shall be eligible for exemption. This exemption shall be in addition to the exemption that will be available in respect of two journeys for the succeeding block.

Quantum of exemption: For journey performed by air — amount not exceeding air economy fare of the national carrier by the shortest route to the place of destination.

For any mode other than air but where rail service is available — amount not exceeding air-conditioned first class rail fare by the shortest route to the place of destination.

Where rail service is not available and recognised public transport system does not exist — an amount equivalent to the air-conditioned first class rail fare for the distance by the shortest route as if the journey had been performed by rail.

If rail service is not available but a recognised public transport system does exist — an amount not exceeding the first class or deluxe class fare on such transport by the shortest route.

Query

I work for a private limited company in Noida. My annual salary is around Rs 5 lakh and my accommodation is taken on lease by my employer and provided to me. The lease agreement is between my employer and the landlord. My employer pays the lease rental directly to the landlord. I do not receive any house rent allowance. How is my perquisite to be valued?

G. Y. Sreenivas

Reply

The value of perquisite in your case will be 10 per cent of salary or the lease rent paid by your employer, whichever is less. This will be in accordance with the Income-Tax Rules. Salary for this purpose would include all monetary payments other than:

Dearness allowance or pay not forming part of salary for computing retirement benefits;

Employer's contribution to provident fund account;

Exempt allowances;

Value of perquisites in kind;

Perquisites provided free of cost or at a concessional rate; and

Employee stock options issued in accordance with the guidelines of the Central Government

Query

I purchased a house by taking a housing loan. Being a salaried employee in receipt of HRA, I am claiming the interest on housing loan as a deduction and also rebate in respect of the principal repayment. Though I stay in the same city in which I own the house, I reside in another house taken on rent. Can I claim exemption in respect of the HRA?

Sam

Reply

You can claim HRA exemption. There is no prohibition in claiming the same merely because you own a house in the same city in which the property taken on rent is located. You may note that there is a prohibition on a claim for deduction under Section 80GG which is not provided for in Section 10(13A), under which, HRA can be claimed as exempt. It may be mentioned that if you do not occupy the house that you own, you may have to offer the notional income from the property as chargeable to tax under the head `income from house property'. Of course you can claim the interest on housing loan as a deduction and also the rebate in respect of the principal repayment.

Query

I work for a company whose registered office is in Hyderabad. The assessment of the company, of which I am a director, is also at Hyderabad. I, however, hold only 10 of the more than one-lakh shares of the company.

I take care of the Chennai operations of the company and operate from Chennai. I am informed that since the company's assessment is at Hyderabad, my returns will also have to be filed only in Hyderabad and my assessment done there.

I have been in employment in Chennai for long now and have been filing my returns there. It will cause me a lot of operational inconvenience to file my return in Hyderabad. Is the Department's view that I must file my return in Hyderabad correct?

Krishnamurthy Rajam

Reply

The jurisdiction in which assessees must be assessed and file returns are determined only by the Revenue. It is understood that there are internal instructions to the effect that the returns of directors of companies must be filed in the same place where the company is assessed.

If you have operational inconveniences you could make an application to the Commissioner or Chief Commissioner of Income-Tax for transfer of the case from Hyderabad to Chennai under Section 127, giving your reasons for the request to transfer the case. The Commissioner or Chief Commissioner of Income-Tax may, if satisfied, transfer your case to Chennai.

Query

I have resigned after having worked for seven years in a company. On resignation, I withdrew the sum standing to my credit in the superannuation account. Since I resigned in the middle of the previous year I also have salary income from the company.

I understand that the sum withdrawn from the superannuation account is fully taxable. Will this be taxable under the head salaries? If this is so my salary income exceeds Rs 5 lakh, thereby reducing my standard deduction from Rs 30,000 to Rs 20,000.

Kulkarni

Reply

The interest withdrawn from the superannuation account would be taxable under the head `income from other sources' and the balance taxable under the head salaries. It may be noted that payment from an approved superannuation fund will be exempt only if it is made:

on the death of a beneficiary;

to an employee on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or

by way of refund of contributions on the death of a beneficiary.

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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