Readers' Corner: Taxation

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I work full time with a multi-national company. I am also a visiting faculty at a few colleges. They pay me by the hour just like their other teachers. When filing income tax, how should I show this income? The colleges deduct tax at source on it.

It seems from your query that you are earning this income as a professional and, therefore, this needs to be reported under the head 'income from business or profession'. There is a presumptive taxation scheme available for specified professionals (legal, medical, engineering, accountancy, technical consultancy etc.) wherein you need to pay tax on 50 per cent of your total receipts from the profession and accordingly, file your return of income in ITR 4 for the tax year 2017-18.

I have changed three companies and didn’t transfer my employee provident fund (EPF) to the new one. Can I withdraw it? How will I be taxed on this?

Since you are in employment, you are not permitted to withdraw the provident fund (PF) money. However, you may consider transferring your PF accumulation from all the three accounts to one account which you are maintaining with your present employer. If all your past accounts are linked to Universal Account Number (UAN), it can be easily transferred using the online process. You need to check with your previous employer and accordingly, consider transferring funds online.

My son is working as a child model and earning money. How will his income be taxed?

A minor's income is generally clubbed in the hands of the parent (mother or father whose total taxable income is higher) for computing the total income and taxes thereon. However, where the child is earning the income from an activity involving the application of his skill, talent, specialised knowledge or experience, the clubbing provisions do not apply. In such a case, the minor child is required to apply for a PAN and file his return independently. Rule 114 of the Income Tax Act mentions that in case of a minor applying for a PAN, documents of any of the parents or the guardian of such minor will be deemed to be the proof of identity and address. Hence, in your case, you can apply for your child's PAN and accordingly sign his return of income as a representative assessee. Also, any investments done out of the income he has earned may be considered for claiming eligible deductions in computing his taxable income and due taxes thereon.

My father owns a house, and the rent is deposited in my bank account. He is retired while I am salaried. Who will pay tax on this rental income?

Rental income from a house property is liable to tax in the hands of the owner of the property. Hence, the rent credited in your bank account is liable to tax in the hands of your father considering he is the owner of the property. Another question arises is how are you treating the rent in your bank account? Is it transferred to your father or the same is treated as a gift. In any case where it is treated as a gift, the same is not taxable in your hands. Gifts from close relatives are not taxable in the hands of recipients. It would be proper if your father receives the rent in his bank account. Otherwise, you will unnecessarily need to explain the transactions to the tax authorities when questioned. Pay attention to the other factors such as rental agreement with the tenant and whether there is any withholding of tax at sources by the tenant? Carefully maintain the records related to the rental income, such as rental agreement, proof of ownership of the house, documenting the understanding between you and your father as to whether the rent is treated as a gift or loan to you and also a confirmation to that effect, etc.

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