Tax treatment for cafeteria allowance

My father purchased two sites, 64/2200 sq ft on August 7, 1975 for Rs 5, 000 and another, 68/1200 sq ft on March 6,{+t} 1982 for Rs 3, 000 and a house was built for Rs 2 lakh. It was sold as one plot with the house in November 2011 for R. 23, 46, 000. My father is a retired Government servant.

How can I find out the cost of acquisition in 1981 for a plot bought in 1975? Does this transaction come under LTCG from sale of residential property or land? What is the difference?

A new house was built in May 2010 in Kerala for 18 lakh and he also owns an ancestral house. Can we claim exemption on LTCG showing this house? Can we buy NHAI/RECL bonds now?

If we can't buy bonds now when is the last date to open a CG account and can the money be used to buy bonds later?

— Dr. V. Anil Kumar

Since one of the plots was purchased prior to April 1, 1981, theFair Market Value of this plot has to be calculated on 1 April, 1981. There are Government-authorised valuers who can do valuation as on April 1, 1981 and the same can be used as cost of acquisition of the plot. Since the property is held for more than 36 months, the gain from its sale would be considered as long term capital gains from sale of house property. Long term capital gain is taxed at a beneficial rate of 20.6 per cent. In case no house was constructed on the land, and land was sold independently, the assessee would not have been entitled to certain exemptions which are available only against sale of house property.

The capital gain arising from the transfer of long term capital asset being a residential house can be claimed as exempt provided the assessee has purchased a property within a period of one year before or two years after the date of transfer; or constructed a residential house within a period of three years after that date. Since the new house built in Kerala does not fall in this time limit, exemption will not be available.

The investment in the specified bonds can be made up to six months from the date of transfer of the original asset. As in this case the asset is sold in November 2011, the investment can be made within six months from the date of sale. In case the assessee has not been able to utilise the amount of capital gain for purchase or construction of the new asset before the due date of furnishing the return of income i.e. in the given case it is July 31, 2012; the capital gain can be deposited by the assessee before July 31, 2012 under Capital gains account scheme. The benefit of capital gain account scheme is available only in respect of purchase of residential house and for investment in bonds.

I am a PSU employee and receive cafeteria allowance, which was introduced in the salary structure of employees in October 2009. As part of the cafeteria allowance, I am receiving professional allowance, newspaper allowance and canteen allowance. Can I claim any exemption on the income received from such allowances.

— V.V.P. Narasimham

The value of free food and non-alcoholic beverages provided by an employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, is exempt only to the extent the value thereof in either case does not exceed Rs 50 a meal. Any other allowance received by the employees is exempt in the hands of the employee only if the same is actually incurred wholly and exclusively for official purposes.

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