Ask Us: on personal investments
Q. If a person is sailing for six months and has no income generated from any source in India, is he still liable to pay tax here ? If that is the case, what would be his tax liability?
A. A person leaving India during an assessment year as a member of an Indian ship will be considered a resident if he is in India for more than 182 days. If the number of days crosses 182 in India, then any income earned by him from anywhere in the world will be taxable in India. He will be treated as a resident and all provisions applicable to a resident will be applicable to the said sailor.
Q. My son is presently working in an MNC, drawing an annual salary of ₹14 lakh and other perks, in addition. He is also entitled to the company’s shares. What I would like to know is: are the shares eligible for tax payment when sold or while holding them; does he have to pay tax the next year also for the same shares?
A. As per the tax provision for AY 2020-21, taxability of Employee Stock Option Plan (ESOP) – the taxability of ESOP is two-fold: first, at the time of vesting the options viz. at the time of accepting the eligible shares as a perquisite. The difference between the fair market value (FMV) and the exercise price is the perquisite and the same will be taxed in the hands of the employee. Usually, TDS will be deducted for the perquisite, taking care of the tax liability.
Second, on sale of the shares received by way of exercising ESOPs, the same is to be treated as a capital asset and tax is to be computed in the following manner — sale proceeds minus transfer expenses minus FMV on the date of exercise. If the shares are held for more than one year (in the case of listed securities) it will be termed as long- term capital gain/loss, and short-term otherwise. In case the shares are not listed, then the holding period criteria will be three years.
Determination of FMV: unlisted – price determined by the merchant banker; if listed – if traded, the average of opening price and the closing price on the exercise date, in case traded on both the exchanges, then, the exchange which records the most volume is to be considered.
Q. I had filed my income tax return on June 19, 2019 for assessment year 2019-20.
The status shows ‘successfully e-verified.’
It’s been six months now, I have not received my refund yet. All my previous returns were done within the normal time and refunds issued. This year, I had done the e-verification from outside the country.
Please let me know if refunds should take this long and whom to approach for getting this sorted out.
A. This is something that we don’t have an answer for; refunds are processed based on various parameters set by the Central Board of Direct Taxes. You may want to raise a ticket through the help desk in the web portal e-Nivaran.
Further, the processing is held up especially in a case where the transactions are to be matched with AIR (Annual Information Return) information and other data reconciliations which the CBDT undertakes for that particular assessment year.
Q. Kindly clarify whether TDS is applicable on dividends from equity shares as per the Budget for financial year 2020-2021
A. Under section 194 w.e.f 01-04-2020, TDS is to be deducted by companies on the dividend issued to its shareholders if such sum paid to a shareholder exceeds ₹5,000 in a year.
(The author is partner, GSS Associates, Chartered Accountants, Chennai)
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