Are gifts from employers taxed?

ou have a question about house rent allowance, medical allowance, or even a general tax query.

Here's where we step in with our experts, Relax With Tax.

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Can my employer "gift" me the performance bonus to evade tax?
If he does so, will he have some extra tax-liability?

- Vibhor Singhal

Performance bonus is fully taxable. Regardless of whether or not it forms part of your Cost-To-Company, it will be taxed at the applicable rate.

If the employer gives you a monetary gift exceeding Rs 25,000, it will be taxed in the hands of the employee. Except on the occasion of marriage.

In case the employer makes a non-monetary gift, then the gift per se would not be taxable but the perquisite value of such gift would be worked out and taxed as salary.

• All about gift tax

Once married, I changed my surname officially (gazette). But my PAN card has my old surname. Do I need to  apply for a new one?

Also, my name was changed in the company records. So last year's investments (Form 16 etc) are in my maiden name.

- Purva Arora  

You would to make a rectification application, along with the proof of change of name/surname and the old PAN card (submit original card), to UTI Investor Services Ltd. Such an application is not a fresh one but only for the purpose of updating the database. 

You would be sent a new PAN card with the same number.

You could attach the copies of certificate for change of name/surname and new PAN card along with the IT return. This would enable a smooth acceptance of the IT return along with Form 16 made out in your maiden name.

• All about Form 16

My company gives me medical benefits in addition to a hospitalisation scheme.

When my wife delivered a baby and the hospital bill came up to Rs 55,000, only the medicines and tests were reimbursed to the tune of Rs 17,000.

Will I not get any tax benefit on the balance Rs 38,000?

- Anurag Sharma

First check out your company's policy on reimbursement of hospitalisation/medical expenses. In case you are subject to certain limitations based on the company rules, then your company has the final say in the extent of reimbursement.

As far as IT regulations are concerned, the perquisite value chargeable to an employee for medical facilities provided by the employer is based on satisfaction of few stipulated conditions.

In your wife's case, if the hospitalisation was done in a government-approved hospital or in a hospital approved by the Chief Commissioner of Income Tax and if the pregnancy involved caesarean operation then such reimbursement would be completely tax-free.

In this case you need to attach a certificate issued by the hospital stating the reason for hospitalisation. In any other case, it would be tax free to the extent of Rs 15,000.

Considering the above, if you have spent the balance sum then you would get no separate deduction for it.

• All about tax refunds

I had an agreement with my company that if the service period was less than a year, I would have to return entire salary withdrawn.

Now, I am entitled to return the entire amount back to the company. Can I claim a tax refund on the Tax Deducted at Source on my withdrawn salary?

- Dhaval Shah

Your query does not clearly bring out the nature of your employment terms. We would need to know if you were employed as a partner or as a regular employee.

Without the details of the case, there would be lot of open scenarios critical in deciding if the refund of money was application of income or diversion of income by overriding title.

However, it would be advisable to refund to the company the net amount after recovering the TDS portion.

This would at least indemnify you against the eventuality of loss on account of TDS, if any.

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Illustration: Dominic Xavier