Consultant? Check the tax issues

I was told that after completion of the financial year, the company would issue me a TDS certificate and I would be able to claim a refund from the income tax department.

If my salary does not fall in the tax slab (since my annual income is less than Rs 1,00,000) then why must I pay 5% as TDS?

- Sachin Gohil

The status of an individual is different when he/she is on the payroll of a company. You are a contractual employee and, hence, technically not on the rolls of the company. Based on the nature of services being rendered and the skill set, you will be treated as a professional or otherwise.

So the benefits available to a salaried employee will be different than those offered to a contractual employee. This includes the authority given to the employer to increase, decrease or waive tax to be deducted based on estimated tax liability of the employee.

The Income Tax Act stipulates that tax should be deducted from the payouts of contractual payments at a specified rate.

In your case you have two options.

1. Allow the tax to be deducted and thereafter claim refund from the Income Tax authorities.

2. Approach your assessing officer and make an application in Form 13. The officer could then issue a certificate authorising the payer to either reduce the tax deduction or not to deduct any tax.

• Paying college fees? Check tax benefits

Some restaurants levy Value Added Tax on the food bill as well as a service charge, while others don't levy both. Why? 

- S Kapur

The details provided by you are incomplete. But based on what you have said, there is a possibility that the restaurant that did not levy VAT may have been covered under the "Composition Scheme" of VAT.

In order to relieve some businesses of the need to keep detailed records, a composition scheme has been introduced. This allows for a simpler method of accounting for and calculation of VAT.

• Problems with your home loan?

I am a software engineer based in Nagpur. I want to take a home loan for the revival of my home in Trivandrum. My account department says that I have to take the loan in the city I am working in to avail of the tax benefit. Is that so?

- Abhijith V R

Based on the facts provided by you, you would be eligible to get the tax deduction on a loan availed for the purpose of revival of your home at Trivandrum.

However, no other monetary benefit should be derived from such house property and it should be used for residential purpose of self and parents. In other words, you cannot rent or lease it out.

The maximum interest deduction eligible would be Rs 30,000 per annum as the loan is for revival of the house and not for construction/purchase.