Your questions: Income tax; Income from a US employer taxable under “salaries”

By Chirag Nangia

My employer is based in the USA and the salary is directly credited to my account in India from the US account. What is the applicable tax rate and under which section of the Income Tax Act am I required to file the returns? And if I list this amount as professional fees and not as salary, then what would be the applicable tax rate?

—Arpit D. Gujarathi

Your income from a US employer would be taxable under “wages” at the ordinary rates applicable to resident individuals. The obligation to file an income tax return is governed by Article 139. Income from the exercise of a profession is also taxable at the ordinary rates of the slab. However, gross business receipts may be reduced by the amount of actual expenses and authorized depreciation, if any, incurred in connection with obtaining business income, and only the net income (after deductions) may be taxed.

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l My uncle died and bequeathed the shares of his demat account to my cousin in his will. I am nominated for actions. Once I receive the shares in my name, I will transfer them to my cousin’s name. Do I have to pay income tax on the shares transferred to my name and when I transfer them to my cousin?

—Vinoo Daniel

Your demat account acts as a simple conduit for the transfer of shares in your cousin’s name according to your uncle’s will. The transfer of shares by the deceased father to his son by will is not subject to income tax.

l Could you advise if a person who sells their existing apartment held for 10 years and uses that money within three years to book a new apartment as part of a new project, all long term capital gains on will the sale of an old apartment still be entirely exempt?

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—Ashiesh Kapoor

The new apartment must be purchased either one year before or two years after the date the capital gains income accrues to the taxpayer. In the case of self-construction, the period is three years. This is because the taxpayer must have a deed or registered deed or other credible evidence proving that the funds were invested under their ownership in a new residential property.

The screenwriter is the director, Nangia Andersen India. Send your questions to [email protected]

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