EMPLOYEE’S : PENSION & FAMILY PENSION

I am 1st year B.com student. My father is a retired Govt.employee and he is getting pension every month. Sir, I have heard about pension and family pension. Is there any difference between these two?

pension is a compensation for past service. Secondly, it owes its origin to a past employer-employee or master-servant relationship. Thirdly, it is paid on the basis of earlier relationship of an agreement of service as opposed to an agreement for service. This relationship terminates only on the death of the concerned employee. Pension received from a former employer is taxable as ‘Salary’.

Family pension is defined in Section 57 as a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of death. Pension and family pension are qualitatively different. The former is paid during the lifetime of the employee while the latter is paid on his death to surviving family members. However, in case of family pension, since there is no employer-employee relationship between the payer and the payee, therefore, it is taxed as ‘Income from Other Sources’ in the hands of the nominee(s).

ALLOWANCE : CHILDREN EDUCATION & HOSTAL FACILITY

I am a salaried person and I have filed my return to income tax department. My elder daughter is studying for medicine and staying at hostel. My youngest son is studying in 9th standard. What are allowances are available to me for the education of my children?

Children education allowance.	Rs. 100 per month per child upto a maximum 2 children.
Allowance granted to meet hostel expenditure on employee’s child.	Rs.300 per month per child upto a maximum two children

ALLOWANCE : EMPLOYEE’S HRA

An  employee  at  Trivandrum living in a rented house. What is the treatment of House Rent Allowance in the case of an employee?

Provided that expenditure on rent is actually incurred, exemption available shall be the least of the following :

(i)            HRA received.

(ii)           Rent paid less 10% of salary.

(iii) 40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi) Salary here means Basic + Dearness Allowance, if dearness allowance is provided by the terms of employment.

SALARY : DEDUCTIONS

I am a Govt. employee and filed my return to Income Tax Department. What all Deduction is avilable for me from my salary income?

The following deductions from salary income are admissible as per Section 16 of the Income-tax Act.

(i)            Professional/Employment tax levied by the State Govt.

(ii)           Entertainment Allowance- Deduction in respect of this is available to a government employee to the extent of Rs. 5000/- or 20% of his salary or actual amount received, whichever is less.

It is to be noted that no standard deduction is available from salary income w.e.f. 01.04.2006 i.e. A.Y.2006-07 onwards.

SALARY : MP/MLA, MINISTER OF STATE

                                                                         

Sir, I am Rahul a commerce student. I am more interested in the subject Income Tax. Kindly s about the salary received by a MP or MLA, Minister of state is taxable?

Yes, it is taxable. Salary received by a person as MP or MLA is taxable as “ Income from other sources”, but if a person received salary as Minister of State/ Central Government, the same shall be charged to tax under the head “Salaries”. Pension received by an assessee from his former employer is taxable as “Salaries” whereas pension received on his death by members of his family (Family Pension) is taxed as “Income from other sources”.

SALARY : INCLUDES

I am a salaried person. I want to file my return to Income Tax  Department.So please, tell me about what does "salary" include?

Section 17(1) of the Income tax Act gives an inclusive and not exhaustive definition of “Salaries” including therein (i) Wages (ii) Annuity or pension (iii) Gratuity (iv) Fees, Commission, perquisites or profits in lieu of salary (v) Advance of Salary (vi) Amount transferred from unrecognized provident fund to recognized provident fund (vii) Contribution of employer to a Recognised Provident Fund in excess of the prescribed limit (viii) Leave Encashment (ix) Compensation as a result of variation in Service contract etc. (x) Contribution made by the Central Government to the account of an employee under a notified pension scheme

TRUST : TAX TREATMENT

I am a retired Military Officer and have started a Private Trust for charitable purpose. The activities of my trust is going on well. Sir, I want to know about Tax treatment of such trusts?
Tax treatment of trusts:
• Approved retirement trusts are also exempt from tax.
• In the case of private trusts, if the individual shares of the beneficiaries are ascertainable, they are included in the individual taxable incomes, the tax assessment being made either directly on the beneficiary or on the trustee as a representative of the beneficiary. However, if the trust has income from business, the entire income from the trust is taxed in the hands of the trustee at the maximum marginal rate applicable to individuals unless the trust is created by will for the benefit of relatives. When the individual shares of the beneficiaries are indeterminate (i.e., discretionary trust), the entire income is taxed in the hands of the trustees, in most cases at the maximum marginal rate applicable to individuals.