No rebate on surety bond payment

SC Vasudeva

During the financial year 2014-15, I worked with one company for eight months and then resigned. Later, during the financial year 2015-16, the company asked me to pay the surety bond money — which was equivalent to my eight months’ salary and interest on that amount. Sir, I want to claim the loss incurred by me due to the repayment of my salary and interest to my ex-employer. Please let me know i) As to how I should claim my salary loss and ii) it has to be claimed in which financial year?

— Gursharan

There is no provision in the Income-tax Act, 1961 (The Act) whereby a deduction for the amount which is paid back to the employer under an agreement executed with the employer is available.  It would be advisable for you to revise the income-tax return for assessment year 2015-16 so as to exclude the salary for eight months as the said income had not accrued to you on account of requirement to repay the salary for eight months under a covenant in the surety bond executed by you with the employer. It may not be possible to claim deduction for the interest on the aforesaid amount as there is no provision in the Act in this regard. The return for assessment year 2015-16 can be revised by March 31, 2017.

I am a pensioner. My total pension is Rs 2,64,000 and interest on fixed deposits is Rs 32,000. I have an RD account in a post office of Rs 500 per month. Please calculate my total income and tax liability. The rebates are as under:

LIC: Rs 1,715

Under Section 80U: Rs 1 lakh

My date of birth is July 8, 1947.  I have also taken loan for house construction. Principal loan paid is Rs 45,000 and interest Rs 21,000. 

Sir, you had calculated my total income as Rs 1,68,000 on the basis of figures given as under: 

Pension: Rs 95,600

Interest: Rs 1,55,000

PPF deposit: Rs 60,000

I fail to understand how you had calculated. Please also tell us about newly introduced proviso to Section 139 of the Income Tax Act.

— Nasib Chand

The facts given in the query are incomplete as you have not indicated the interest income from post office as well as income from house property against which deduction for interest on amount borrowed for construction of the house would be allowable. You have also not indicated about the nature of the severe disability for which a deduction of Rs 1,25,000 is allowable instead of Rs 1,00,000 w.e.f. assessment year 2016-17.  It is, therefore, not possible to compute your total income and tax payable thereon, if any.

Your reference to computation of total income of Rs 1,68,000 is also incomplete as you have not indicated the date on which the relevant reply was published to enable us to verify your assertion. The Finance Act, 2016, has introduced a proviso requiring a person who is a resident other than not ordinary resident in India who is not required to file a return, is now required to furnish a return of income, if he fulfills certain conditions specified in the proviso.