Financial Daily from THE HINDU group of publications
Sunday, Dec 26, 2004
Financial Daily from THE HINDU group of publications Sunday, Dec 26, 2004 |
|
|
|
|
|
Investment World
-
Income Tax Columns - Tax Talk An engineer at sea counting days of residence T. Banusekar
The ship was on foreign waters for 165 days and in the Indian waters for 18 days during the period when I was aboard the ship. The ship was a foreign-going vessel as per the records of the Indian maritime authority. This status was maintained in the records of the said authority for 183 days in the current year. My employer now wants to deduct tax at source on the foreign exchange earnings received by me while I was on board the ship stating that I have been away from India only for 165 days (excluding the 18 days in which the ship touched Indian waters). Is this correct? If I were to now travel abroad for a holiday for 18 days will I be taxable in respect of my income earned in foreign currency. My employer says this will not be possible and that tax will be deducted at source even in such a case. Is this correct? Subbu Reply The answer to your question essentially revolves on your residential status. By virtue of Section 6 of the Act you would be treated as non-resident if you have stayed in India for less than 182 days. This will particularly be so since you have left India in the previous year as the member of a crew of an Indian ship. From the facts given by you it is clear that you have been out of India only for 165 days. You cannot, therefore, be treated as a non-resident. This would mean that the income earned in foreign currency would be taxable in India in accordance with the I-T Act by virtue of Section 5 of the Act. Your employer is, therefore, right in stating that tax will have to be deducted at source on the income earned by you in foreign currency even during your stay outside India. If, however, you travel on a holiday outside India and if as a result of your travel, the number of days of stay in India comes to less than 182 days, the income earned by you in foreign currency while you were outside India will not be taxable in India provided the income was not received by you in India. This would be because by virtue of explanation (a) to section 6(1), read along with section 6(1) you would be treated as a non resident if your stay in India is less than 182 days in the previous year. Your employer in such a case need not deduct tax at source on the income earned by you in foreign currency while travelling outside India. You may note that the purpose of your visit outside India in the instant case will not be relevant. Similarly, the fact that the ship on which you travelled being maintained in the records of the Indian maritime authority as a foreign going vessel is also not relevant. Query I work for an organisation which is an autonomous technical educational institute. This institute is funded by the Central Government and registered under the Societies Registration Act. What are the income-tax provisions applicable to such institution? Aravindakshan E. Reply Your institution may be eligible for exemption under Section 10(23C). Under this section, exemption is available to:
In the event the institution is not eligible for exemption under Section 10(23C), you may examine the possibility of claiming exemption under Section 11 subject to satisfying Sections 11 to 13 of the Act. Query I am an individual who regularly buys and sells shares in the stock market. I do daily trading and square off the transactions in certain occasions. I also, at times, take delivery of the shares and hold them for some times. Such holding may in certain cases exceed 12 months. Is it possible for me to offer the income arising out of the daily trading which is non-delivery-based as business income and the income from shares taken delivery of as capital gains, thereby paying 10 per cent tax when the gain is short-term and claiming full exemption from tax when the gain is long-term. Manmohan Singh Saluja Reply In any case, where there is the buying and selling of shares without taking delivery and where such transactions are voluminous, there can be little doubt that the gain or loss arising out of such transactions should not be taxed as capital gains but as business income. Whether a person carries on business is normally depended upon the volume, frequency, continuity and regularity of transactions of purchase and sale and also on the basis of whether the transactions are entered into with a profit motive. One cannot dismiss a theory that a person who is in the business of buying and selling shares can also hold some shares as investment giving rise to a capital gain on the sale of these shares. This will have to be examined in the facts and circumstances of the case and there cannot be a single test or formula to decide this factor. This may be dependent on various factors, such as the intention of the party, the entries in the books, if any, maintained, the sources of funds for investment (whether borrowed or own), the volume of such transactions and also the manner in which the same has been accounted for and offered to tax in the earlier years. In your case, you will have to examine all of these to arrive at a definite conclusion in the matter.
Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|