Insurance coverage premium for vehicle utilized for company is tax exempt

Can I claim tax exemption on the insurance policy I have taken for my scooter? —Sanjay

If you have revenue from business and occupation and the scooter is utilised wholly and exclusively for the explained business, then the insurance premium paid can be claimed as business expenditure. Nonetheless, if you do not have cash flow from enterprise or profession, you are not able to claim deduction in the direction of scooter insurance payment.

What is the tax therapy on surrender or maturity for unit-linked insurance coverage plans (Ulips)? —Ipsita Das

The volume acquired on maturity of an Ulip is exempt from tax under segment 10(10D). In respect of insurance coverage policies issued on or right after 1 April 2012, the aforesaid exemption is permitted only for policies exactly where premium payable for each yr is up to 10% of the sum assured. In case of policies issued amongst 1 April 2003 and 31 March 2012, the aforesaid exemption is permitted only for policies wherein premium payable for every year is up to twenty% of the sum assured.

Accordingly, if these upper limits in terms of the premium are not compiled with, the maturity proceeds shall be taxable in the 12 months of receipt.

I am a government employee and have just received arrears for the previous 2 years. Am I liable for tax deducted at supply on the whole sum in this 12 months? —Murali N.

Salary revenue is taxable in the year in which it is due or received, whichever is earlier. Therefore,, if salary arrears were due, i.e. the amount ascertained and unconditionally payable to you in previous 2 fiscal years (FYs), it ought to have been taxed in the past in the respective FYs. But exactly where it can be established that there was an uncertainty on the payment and/or quantum of arrears, the very same may possibly be taxable in FY14 on receipt basis, if not presently taxed earlier.

Accordingly, the employer would be liable to deduct tax at the applicable revenue slab charge at the time of payment of salary arrears, and deposit the same into the government treasury inside the specified due dates. The higher tax incidence in FY14 owing to salary arrears becoming taxed in the 12 months of receipt can be mitigated by claiming a relief, as per the prescribed arithmetical formula specified under section 89. There is also a prescribed type to be produced to your employer for this function.

Apart from this, you would be required to report the salary arrears along with the taxes deducted at source by the employer in the tax return form. The relief, if any, claimed has to be reported in the routine titled “relief” of the tax return kind to be compliant from disclosure viewpoint.

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