Sebi gets 70 applications under Investment Advisors Regulation
BS REPORTER
Chennai, 19 October
The Securities and Exchange Board of India ( Sebi), which had directed
all independent investment advisors to register with the regulator,
according to the Investment Advisors Regulation, had received only
about 70 applications, said Sebi Executive Director Ananta Barua.
He added from October 21, only those who had registered under the
regulation with Sebi would be able to offer investment advisory
services.
The regulation focuses on a shift from the product- centric model to a
customer- centric one. Under the regulation, individuals, corporations
and partnership firms engaged in providing investment advice would be
registered and regulated.
The regulation was announced in January. " We did not make these
regulations immediately applicable. We gave a lot of time... That is
why I am surprised the applications received are very few," Barua
said.
Banks or companies offering distribution, execution or referral
services would have to offer investment advisory services through a
subsidiary or a separate department or division, Sebi has said.
Sources said many experts working as advisors were concerned at this,
as the regulation restricted them from engaging in activities such as
distribution of mutual funds.
Know the tax benefits of house rent
MAYUR SHAH
As the real estate prices in metro cities continue to remain high,
many salaried individuals either prefer or are compelled to stay in
rented houses. Many are postponing their decisions to purchase a
house, given the increasing interest costs. In such cases, tenants
should know the tax exemptions they can avail of by staying on rent.
Let us take an example.
Abhijeet Khanna, a management graduate working with a multi- national
company in Mumbai, recently got married to Khyati, a doctor. Khanna
earns an annual basic pay of ₹ 10 lakh. In addition, he is paid a
House Rent Allowance (HRA) amounting to ₹ 3.5 lakh and city
compensatory allowance of ₹ 1.5 lakh. Khanna does not own a house.
However, Khyati is a doctor earning a net salary income of ₹ 7.5 lakh
plans to purchase one, for which she is considering taking a bank loan
of ₹ 60 lakh at an interest rate of 10 per cent.
Are there advantages of buying the property in Khyatis name? Should
Khanna rent a flat or stay in the flat to be purchased by Khyati and
pay her rent of ₹ 3 lakh per annum? Will Khanna stand to gain if he
pays rent to his own wife? There are certain taxes that Khanna can
save in such asituation, subject to certain conditions.
House rent allowance
Most salaried people receive HRA as part of the compensation
structure. A salaried taxpayer is eligible to claim HRA exemption
under section 10 ( 13A) of the Incometax Act, 1961 in respect of a
residential accommodation occupied by him, except where the same is
owned by him or he has not actually incurred the rent expenditure.
Accordingly, an HRA exemption is available for least of the following
amounts: [1]Actual HRA amount received from the employer; [1]The
amount of rent you pay for your house in excess of 10 per cent of your
basic pay; or [1]50 per cent of basic pay if you reside in a metro
city and 40 per cent of basic pay for non- metro cities.
In a recent judicial precedent of Bajrang Prasad Ramdharani v/ s ACIT,
the Ahmedabad Income- tax Appellate Tribunal held that the exemption
of HRA to the taxpayer husband was available for payment to his wife,
who was the landlord and lived in the same house. In its decision, the
Tribunal highlighted that for granting a claim of exemption, only use
of the house by the taxpayer and payment of rent was mandatory.
Interest deduction
The wife can also claim deduction up to ₹ 1.5 lakh towards payment of
interest on the housing loan taken for aself- occupied property.
However, where the property is let out as in the present case, entire
interest paid would be allowed as a deduction. ( See table for tax
computation)
While the savings on tax can be substantial, Khanna and his wife have
to keep some things in mind: [1]The income- tax slab and rate
applicable to the landlord spouse should be lesser than the tax rate
applicable to the tenant to enjoy a tax advantage [1]The rental income
should be appropriately reported in the tax return of the landlord
spouse [1]Income earned by the landlord spouse must not qualify for
clubbing with the tenant spouse under the relevant income- tax
provisions. Even for wealth tax, wealth acquired by the wife from
assets transferred by her husband could be clubbed with the wealth of
the husband. Therefore, the wife must make personal contributions to
acquire loans towards the purchase [1]Banks insist registration of the
property in the name of the person applying for the loan and
demonstrating capability of discharging the monthly instalments
[1]Appropriate documentation in terms of a proper rent agreement, rent
receipts, bank accounts, etc must be maintained to reflect the
independence and real nature of the transaction [1]Where the husband
incurs business debt or loss, a house registered in the wife's name
cannot be attached to cover the loss
Source: The author is Executive Director - Tax & Regulatory Services,
EY. Jay Unarkar, Associate Director - Tax & Regulatory Services, EY
contributed to the article. ( Views expressed are personal)
Basic Pay 10,00,000 City Compensatory allowance 1,50,000 HRA received 3,50,000
Rent paid in excess of 10% of Basic pay 2,00,000
50% of basic salary 5,00,000
HRA exemption ( 2, 00, 000)* Balance Taxable 1, 50, 000
Income from Salary 13,00,000 7,50,000 Rental Income from Abhijeet 3,00,000
Less: Standard Deduction @ 30% - 90, 000 Less: Housing Loan interest -
6, 00, 000 Income from House Property - 3, 90, 000
Gross Total Income 13,00,000 3,60,000
Less: Deductions under section 80 C - 1, 00, 000 - 1, 00, 000
Total taxable Income 12,00,000 2,60,000 Tax on the above 1,95,700
4,120 Tax on income in ordinary course 2,57,500 61,800 Tax saved
61,800 57,680
Tax saved by the couple - 1, 19, 480
*Number in bold represent deductions/ tax savings THE TAX COMPUTATION COMPARISON
Rent paid to one's wife is eligible for exemption if property, home
loan are in her name
--
CS A Rengarajan
9381011200
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