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 We
are an Indian company designated by the Central Government as an
infrastructure facility. What tax benefits will our US investors
be eligible for?
Your
US investors should classify as an ''infrastructure capital company''
under Section 10 (23G) of the Income Tax Act, 1961 (ITA), which
includes a company that has made investments by acquiring shares
or providing long-term finance to an enterprise wholly engaged in
the business of developing, maintaining, and operating an infrastructure
facility. Your US investors can avail of tax benefits under Section
10 (23G) of the ITA, whereunder its net income (by way of dividend,
interest or long-term capital gains) will be exempt from tax after
taking into account all expenses incurred to earn the same. Such
dividends, interest or long-term capital gains income would be exempt
in the hands of an infrastructure capital company only for those
assessment years during which the infrastructure facility has been
approved under Section 10 (23G). The effect of these provisions,
therefore, are that income tax benefits would only be available
to your US Investors on its net income in a year in which your company
has been approved as an infrastructure facility.
I am working with a public sector unit for
the past seven years on contract basis, which is renewed yearly.
I enjoy cordial relations with my employer, but in case they do
not renew my contract, what recourse do I have?
The course of action open to you will depend
on your category of employment. If you belong to the management
or administrative cadre (that is, non-workman) employee, the terms
of your employment will be governed by your contract of employment.
Once your services are terminated in accordance with the terms of
your contract of employment, you may not be forced back upon your
employer by any legal action nor may you succeed in any suit unless
the procedure for your termination was not in accordance with your
contract of employment. However, if you classify as a workman under
the Industrial Disputes Act, 1947, (that is, if you are employed
to do any manual, unskilled, skilled, technical, operational, clerical
or supervisory work and in such supervisory capacity you do not
draw wages more than Rs 1,600 per month or exercise functions mainly
of a managerial nature), you can seek relief from the Labour Court
for unfair or wrongful dismissal.
Can the employees of our company who are
opting for Voluntary Retirement Scheme (VRS) claim tax deduction
on the VRS compensation paid to them?
Your employees can claim tax deduction on the
entire amount of VRS compensation paid by your company if this amount
does not exceed Rs 5 lakh. Any amount in excess of Rs 5 lakh will
be subject to income tax. However, to qualify for this exemption,
your company has to fulfil conditions including (i) the VRS should
apply to all employee(s) who have completed 10 years of service
or 40 years of age, including workers and executives except directors;
(ii) the VRS should result in overall reduction in the existing
strength of the employees; (iii) the vacancy pursuant to the VRS
should not to be filled up nor the retiring employee be employed
in another company or concern belonging to the same management;
(iv) in case of companies/co-operatives societies, the VRS should
have been approved by the Chief Commissioner/Director General of
Income Tax; (v) the VRS compensation should not exceed three months
salary for each completed year of service or salary at the time
of retirement multiplied by the remaining months of service before
the date of retirement subject to a maximum amount of Rs 5 lakh
for each employee.
The views expressed here should not be construed
as legal opinion and is for reference only. Business Today and/or
the author will not be responsible for any decision taken by readers
on the basis of these views. Please send in your queries to Legal.bt@intoday.com
or Going By the Book, c/o Business Today, F-26, Connaught Place,
New Delhi-110001.
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