VB Prabhu Verlekar
Q. I am retired senior citizen. I was born, lived and married in Goa. I am governed by Communion of Properties as per Portuguese Civil Code. However, not realizing the benefits, I have been filing my tax returns individually, that is separate for me and my wife. Can I now file tax returns claiming benefit of Section 5A if Income Tax Act, 1965.
John Pereira, Porvorim
Since you are governed under Portuguese Civil Code u/s 5A of I.T. Act, henceforth you can file tax returns for you and your wife separately after clubbing income of both under different heads other than salary and dividing the same in equal shares. However, it is advisable to claim TDS in the name of respective spouse to tally with Form 26AS and avoid disallowance of TDS credit.
Q. I am a Catholic priest working in a government aided high school run by the Diocesan Society of Goa. Though I am getting salary from the school as teacher, the entire salary is surrendered to the Society as per rules of religious congregation obliging members to the vow of poverty. Is school management liable to deduct tax at source from salary payments made to member priests of our congregation and will they be required to file income tax return in their individual capacity?
Fr. Luis P. Mascarnhas, Margao
In Judgment of Kerala High Court in Writ petition filed by Fr. Sabu P. Thomas and another Vs Union of India and others reported in (2015) 375 ITR 352 (ker), it is held after duly considering in depth Code of Canon laws and CBDT circular dated 05.12.1977, that legal right to receive salary payments accrued to individuals concerned who had rendered service in their individual capacity based on their qualifications and not to the congregation of which they are members.
Consequently, the entrustment of the amounts received by the members of the congregation was tantamount to an application of income by the members in favor of congregation and not diversion of income at source by overriding title. In view of this judgment, school management will be required to deduct tax at source from the salaries of the priests of their congregation and they will also be required to file tax returns in their individual capacity as per Income Tax law even if TDS is made.
Q. I am a Bhatkar having coconut and areca plantation. My net annual income from it is over Rs 15 lakh. In addition, I earn interest of Rs 6 lakh on bank deposits. What will be my income tax liability?
Panduram M Kamat, Madkaim, Ponda
Income from coconut and areca plantation is considered as agricultural income and is free from Income tax. However, since you also have non- agricultural income, agricultural income will be aggregated for rate purposes for charging tax on non- agricultural income. In your case, if you were to earn Rs 15 lakh from agriculture only, then there would not have been any tax. However, since there is non- agricultural income of Rs 6 lakh, income tax would first be calculated on Rs 21 lakhs. From this, tax on Rs 18 lakh (basic exemption limit + agricultural income) will be deducted and the tax that you will have to pay for AY 2025-26 on Rs 6 lakh will be Rs 90,000 (i.e., Rs 3,20,000– Rs 2,30,000) reduced by rebate under section 87A of Rs 25,000, i.e. Rs 65,000 under the new regime.
Q.I was working in Goa, till 30th September 2024. On 10th October 2024, I left for Dubai for service and since then I have not returned to India. What will be my income for AY 2025-2026?
John N. Carvalho
Since your stay in India is more than 182 days during the financial year 2024-25, you will be considered as ‘resident and ordinarily resident” under the IT Act. In this tax status, your entire world income including that earned in Goa and Dubai from April 1 to March 31 2015, will be liable for tax in India.
Q. On my 75th birth anniversary I wish to give Rs 5 lakh each to my three children, Rs one lakh each to two of my servants who have been taking care of me and Rs 3 lakh to the parish church. Will I have to pay gift tax or any other tax on these amounts?
Joaquim Valadares, Taleigao
Gift Tax is abolished from October 1 1998. However w.e.f October 1 2009 (AY 2010-11 and onwards) gifts in cash or in kind, in excess of Rs 50,000, are treated as income in the hands of recipients except specified relatives, which includes own children under section 56 (2) (vii) of IT Act. You are therefore not required to pay any gift tax or income tax on gifts made. Gifts received by your children will not be treated as their income. However, amount gifted to servants and parish church will be treated as their income.
Q. I am doing contract business. I will shortly be moving to my newly constructed bungalow. I will be selling all old furniture, refrigerator, kitchen equipments etc. I will get around Rs 30 lacs. At what rate do I have to pay GST and Income Tax?
Patric J Paes, Taleigao
Income tax on capital gains is required to be paid on sale of capital assets as defined in the IT Act. As per said definition, personal assets and household goods are excluded from capital assets. In view of this, you will not be required to pay any income tax irrespective of the amount you have realized from sale. GST is attracted on sale of goods in the course of business. Since goods you are selling are personal goods, they will not be liable for GST.
The writer is well established, senior practising chartered accountant with wide experience in taxation and finance. He is also a strategist in turn round management of institutions.
