Section 54EC provides exemption of tax on amount of capital gain invested in the specified bonds. Thus, only the amount of capital gain, not the sales consideration, is to be invested in specified bonds.
Can I ask my employer to deduct the entire tax liability in one month instead of doing it every month in parts?
– Raminder Singh
An employer deducts tax at source (TDS) and not advance tax. An employer is required to deduct TDS at the time of payment of salary to employees. Since the employer is paying salary every month, he is liable to deduct TDS every month else he shall be liable to pay interest and penalty.
> My father wants to sell a commercial property and invest the sum in Section 54EC bonds. Will he have to invest the entire sale proceeds in it?
—Pravin Agarwal
Section 54EC provides exemption of tax on amount of capital gain invested in the specified bonds. Thus, only the amount of capital gain, not the sales consideration, is to be invested in specified bonds.
> My brother has a non-resident external (NRE) fixed deposit in a bank. Will he have to pay any tax on the interest?
—Gautam Sharma
As per Section 10(4)(ii), interest income earned on NRE account is tax exempt if account holder is treated as a person resident outside India under Foreign Exchange Management Act (FEMA). Thus, taxability of interest earned on NRE FD account would depend on residential status under FEMA.
> I stayed out of India for 200 days in 2017 and 2018. How do I calculate tax?
—P S Murlidharan
Tax treatment of an individual is dependent on his residential status. The residential status is classified into three categories — ordinarily resident (ROR), non-ordinarily resident (NOR) and non-resident (NR). ROR is taxed on his global income in India, NR pays tax only on income accruing or arising/ received or deemed to accrue or arise/ received in India. All income earned by NOR is taxed in the same manner as specified for taxing income earned by ROR except foreign income. NOR is not required to pay tax on income accruing or arising outside India unless it is derived from business controlled in or a profession set up in India. Residential status is determined on the basis of threshold specified which is differ-ent for each category and takes into cons-ideration period of stay in years preceding the relevant year for which residential status is to be determined. Given the limited facts, it is not possible to ascertain your residential status only with the information on period of stay in 2018.
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