Q & A Corner

Our columnist answers various queries relating to the computation of tax

Is the Rs 100 per child per month education allowance still valid as a non-taxable perquisite?

Suresh M Gupta, sureshgupta@dcdesign.co.in

Regarding the perquisites, what has changed is rule-3 of the Income Tax Act. Section 10(14ii) read with rule 2BB(2)(5) exempts the fee allowance upto Rs 100 per month (up from Rs 50 by the Third Amendment rules 2000, w.r.e.f. August 1, 1997) and for hostel accommodation upto Rs 300 per month (up from Rs 150 by the Fourth Amendment rules 2000, w.r.e.f. April 24, 2000) per child upto a maximum of two children.

Section 10(16) exempts scholarships granted to meet the cost of education. If the objective of the person paying the scholarship is to meet the cost of education, it is exempt u/s 10(16) even if the recipient does not spend the entire amount on education or if he saves something from it. Both these sections co-exist with the new rule.

I have a problem in computing the tax on my long-term gains.

* B/F long term losses as on March 31, 2001=35,000

* Long term losses from April 1, 2001 to November 30, 2001=40,000

* Long term capital gains on the buy back of Castrol Bonus shares=2,00,000

Now If I invest the entire Rs 2 lakh long term capital gains in a Section 54EC avenue, can I carry forward the Rs 75,000 long term capital loss to April 1, 2002?

My tax consultant says that it would be wiped off. He says that I should invest only Rs 1,125 less in 54EC. If I invest the entire Rs 2 lakh in 54EC, can I carry forward the losses to next year?

M K Jain, 2/3, Munirka Vihar, New Delhi-67

Yes, you are right. Depositing the Rs 2 lakh in bonds will enable you to continue to carry forward the Rs 35,000 loss and also add this year