Income from House Property
Q I booked a flat in November 2009 and I will get its possession in December. I plan to prepay the loan of Rs 26 lakh by selling my existing flat. Will I be required to pay any capital gains tax?
A If the existing flat is a long-term capital asset (for example, period of holding > three years) at the time of its sale and the sale takes place within one year from the date of purchase of the new flat, then the long-term capital gains arising on the sale of existing house will be exempt from income tax.
Q I have sold a residential house at value less than that is accepted by stamp valuation authority. So do I have to pay capital gain tax? Can I avail of exemption u/s 54 if I purchase another residential house? Does the buyer also have to pay tax if he purchases the property at lesser value than that is accepted by stamp valuation authority under the head other sources?
Neha Chaturvedi
A U/s 50C, you will have to consider higher of the stamp duty value and transaction value as sale consideration for computation of capital gains. Yes, you can still claim exemption u/s 54 if the property sold was a long term capital asset and you meet the all other conditions specified in Section 54. No, the buyer is not required to pay tax on the differential amount.
Does the deduction for a housing loan interest amount of up to Rs 1.5 lakh is the limit per individual or per property? Also, if both husband and wife are the co-owners of the house property in a ratio 60:40, and have availed of a housing loan, can both of them claim a deduction to the extent of the entire interest amount of Rs 2,50,000? Or will they have to share this tax benefit in the proportion of their co-ownership? Does one need to mention the details of the co-ownership while claiming this deduction?
SHAILESH I PURANIK
As long as you can establish that ratio of ownership in the property is definite and ascertainable, the limit on the amount of deduction on interest payable on housing loan is per individual and not per property. For this purpose, you may have a separate agreement with your spouse specifying the individual ownership and liability towards repayment of the loan.
JOINT HOUSING LOAN AND TAX BENEFITS
Q My brother and I have decided to buy a flat and we will take a joint housing loan. How can we claim tax benefits for this year? — Ravindra
A You can claim the tax benefits in the ratio in which you contribute EMIs for the property. You should keep the ratio constant throughout the term of the loan.
Q I am going to buy a flat in Pune. My father-in-law is ready to lend for the house. Can my wife take tax benefits on this loan? Does it require additional documentation?
A Yes, your wife can claim deduction on interest payable on loan taken from her father for purchase of the house. A memorandum of understanding between your wife and your father-in-law may be prepared specifying the terms
of lending.
Q Will an assessee be eligible to claim deduction for interest for building a house u/s 24(b) even though the house is registered in the name of his wife? Will he be able to claim deduction u/s 80c for principal repayment on loan borrowed by him even if they are not joint owners?
A The answer to both the queries is No.
Q In 2005, Mitul Vora, a marketing executive with an auto company, took a Rs 8 lakh loan for 15 years to buy a house in Gandhidham, Gujarat. Currently, he is paying an EMI of Rs 8,700.
However, a year later, Vora switched jobs and shifted to Ahmedabad. Instead of renting a place, he bought another house, again through a home loan of Rs 20 lakh for 20 years, for which the EMI is about Rs 20,650.
"I could have sold the house at Gandhidham to fund the second purchase, but didn't do so because I'm sure the value of the property will appreciate in a couple of years," says 43-year-old Vora. Instead, he has leased the first house at an annual rent of Rs 84,000.
Can I reduce the tax liability ?
A In case of a home loan taken for a self-occupied property, the principal amount repaid up to Rs 1 lakh qualifies for deduction under Section 80C, while up to Rs 1.5 lakh of interest paid is taxdeductible under Section 24.
However, in case of a home loan for the second property, only interest payment is eligible for deduction. No tax benefit is available on the principal repayment on the second loan. However, the good part is that there is no limit on the deduction for interest payment on the second loan (see Benefit of buying a second house). This is because the second house has been given out on rent, explains Adhil Shetty, chief operating officer of Bankbazaar.com.
According to Homi Mistry, partner, Deloitte Haskins & Sells, a property owner can avail of tax benefits on the interest paid on multiple home loans. "Whether the second house is purchased purely as an investment option or as a weekend getaway, the interest paid on a loan taken to buy it is tax-deductible. Since the interest payment is a large expense, you can add significantly to your disposable income if you can save on it," says Mistry.
In case the house is yet to be constructed, 20% of the total interest paid during the preconstruction period is also allowed as tax deduction. This is available for five years from the time the construction is complete till you get possession.
Deductions allowed on income from second home
Even if the second house is lying vacant, the Income Tax Department will consider that it has a rental value. The notional or deemed income (see How income is computed) will be added to your taxable income.
Sonu Iyer, tax partner, Ernst & Young, says, "A buyer can deduct expenses, such as municipal or property taxes actually paid, from the deemed income. Other than this, 30% of the net annual value, which is the difference between the rental income and municipal taxes, is also allowed as deduction. In case the house is rented out, 30% of the actual rent can be deducted from the taxable income, apart from deductions for local and municipal taxes."
After deducting such expenses from the income that you earn from the property, if you incur a loss, you have the option to set it off as follows:
The current year's loss will first be set off against any other income from property.
. It can also be set off against other incomes, such as that from salary, business or profession and capital gains, earned in the current year.
. If your balance continues to be in the red, you can carry forward the loss for up to eight years. However, the amount that is carried forward is only allowed to be set off against the income that is earned from a house.
How to save on taxes
If you own several houses, you can choose one as your primary residence. The income from this property will be treated as nil and exempt from tax, even if you have actually rented it out. It is for this house that the limit of Rs 1.5 lakh applies for deduction on loan interest.
The entire interest on the loan taken for the other house, the income from which is taxable, can be deducted from your income. This applies to any number of nonexempt houses that you may own.
So, to maximise your savings, consider the house with the highest loan as the non-exempt one. However, make sure that the interest payment on this loan is higher than the principal-cum-interest payment on the other loan.
Additionally, if you give your second house on rent for more than 300 days in a year, it will not be subject to wealth tax, which is levied at the rate of 1% on wealth that is in excess of Rs 30 lakh.
If any of the houses is sold after three years, the profit will be taxable as long-term capital gains. However, there are beneficial provisions under which this gain is exempt from tax. So if you invest the money to construct a house within three years or buy another house within two years, your income will be tax-exempt.
However, the exemption is reversed and the amount taxed as capital gain if the new property is sold within three years of being constructed/purchased.
This will be considered a short-term gain and taxed according to your slab rates. You can also save tax if you invest the profit in a special bank account under the capital gain account scheme. A similar exemption is available for investments of up to Rs 50 lakh in bonds, which are redeemable after three years. This investment should be made within six months of the sale.
source : http://articles.economictimes.indiatimes.com/2012-04-23/personal-finance/31386956_1_deductions-home-loans-second-house
Q Two is company |
| A joint home loan is a perfect choice if you want to borrow a big amount and enjoy more tax benefits.
A home loan is usually a big liability on an individual’s personal finance and needs a lot of careful calculations before one actually goes for it. Sometimes you may want to buy a house of a big value, but you may not be eligible for a huge amount of loan from the bank. This is where joint home loans can come in handy. Also, a joint home loan brings with it additional tax benefits.
A joint home loan is one which is taken by more than one person. Let’s look at some of the features of a joint home loan.
Co-borrower
A co-borrower is a person with whom you plan to take a home loan jointly. This is different from a co-owner, who is a person having a share in the property. Usually banks insist the co-owners to be co-borrowers of the loan. However, the reverse is not necessary. In India, a home loan can have up to six co-borrowers. Usually a joint home loan is taken by the spouse or the parent or the child. You cannot take a home loan jointly with your friend or colleague or an unmarried partner.
Tenure
If the co-applicants of the joint home loan are spouses, the maximum loan tenure can be up to 20-25 years, depending on the housing finance institution. However, if the co-applicants share a parent-child relationship or are siblings, the maximum term is restricted to 10 years in most cases. In the case of a joint loan taken by a parent and child, the repayment is linked to the parent’s income and the maximum loan tenure is restricted to the retirement age of the parent.
Documentation
A joint home loan requires both the applicants to furnish the necessary Know-Your-Customer (KYC) documents. This includes the address proof, ID proof, income proof and the bank statements of both the applicants as well as the proof of co-ownership of the property.
Repayment
Although the loan is taken by more than one person, the EMI payment will have to be made only by one of the borrowers. The payment can be made from a single or joint account of one of the borrowers. The borrowers can also choose to share the number of EMIs between them in the whole year. However, it must be remembered that all co-borrowers are jointly and severally liable to repay the loan. This means if one of the borrowers refuses to pay the loan, the other borrower is liable to pay it.
Let us now look at the benefits of taking a joint home loan.
Borrow more
An important reason why you should opt for a joint home loan is that it will make you eligible for a larger borrowing amount.
Suppose, you would like to buy a property worth Rs 1 crore. The bank is ready to fund 80 per cent of this amount, which is Rs 80 lakh. However, you must meet the eligibility criteria of the bank. This means your income should be sufficient, according to the bank’s stipulations, for you to be eligible to get a loan of Rs 80 lakh. If your income does not meet the requirement, you will be forced to look at a house which costs less. However, if your spouse is working and you choose to take a joint home loan, both yours as well as your spouse’s income will be considered by the bank to determine the eligibility limits of the loan.
Tax benefits
Another important reason why you should opt for a joint home loan is to receive additional tax benefits. This is the reason most working couples opt for a joint home loan as the tax liability is reduced significantly at the family level.
Under the income tax act, the principal as well as the interest component is eligible for deduction from your income. The principal repayment falls under the ambit of Section 80C and the interest repayment under Section 24 (b) of the act. Thus, an individual can claim up to Rs 1 lakh on the principal repayment and up to Rs 1.5 lakh on the interest repayment in a financial year. This is for one individual.
However, if you opt for a joint loan for a self-occupied property with your spouse, which is to be held in equal proportion, both you and your spouse can claim a deduction on the principal and interest repaid separately from both your incomes to the extent of your share in the loan.
Let’s understand this with an example. If you take a home loan in your single name, the maximum deduction you can claim in a year is Rs 1 lakh on the principal repayment and Rs 1.5 lakh on the interest repayment.
In the case of a joint home loan, if the total principal repaid during the year is Rs 2.5 lakh and the total interest repaid is Rs 4 lakh, both you and your wife can claim up to Rs 2 lakh on the principal repayment (Rs 1 lakh each) and Rs 3 lakh on the interest repayment (Rs 1.5 lakh each). So, a joint home loan results in more savings. Hence, it always makes sense to opt for a joint home loan.
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Income from Salary
Q I have taken two mediclaim policies for our family. As I do not require the rebate under Section 80-D, can my wife claim the rebate? I am the proposer of both policies.A Your wife can claim tax rebate on both the policies only if she has made payment for both of them.
Q The company has provided a car to me. However, there is no record that I am the user of the car and I bear the fuel expenses. I claim allowances as per the prescribed norms. How is the perk value calculated then?
A It appears that the car is being used for personal as well as for official purposes. Perquisite value in such a case is INR 1,800 per month. If the car is chauffeur-driven and his salary is paid by the company, then add another INR 900 per month to the perquisite value.
Q Can I pay rent to my parents or spouse to avail HRA benefits?
A You can pay rent to your parents, however, they need to account for the same under ‘Income from other sources’ and will be entitled to pay tax for the same.
On the other hand, you cannot pay rent to your spouse. In view of the relationship when you take up residence together, you are expected to do so and hence such a transaction does not bear merit under tax laws. Sham transactions can only spell trouble under scrutiny, so steer clear of these.
http://taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html
http://taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html http://taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html
Do I need to submit any proof for my HRA claim?
You need to submit proof of rent paid through rent receipts, for which only 2 need to be submitted, one for the beginning of the year and one towards the end of the financial year. It should have a Re. 1, revenue stamp affixed with the signature of the person who has received the rent, along with other details such as the rented residence address, rent paid, name of the person who rents it etc.
Can I simultaneously avail tax benefits on my home loan and HRA?
The tax benefits for home loan and HRA are two separate entities and have no direct bearing on each other. As long as you are paying rent for an accommodation, you can claim tax benefits on the HRA component of your salary, while also availing tax benefits on your home loan. This could be the case if your own home is rented out or you work from another city etc. However, you need to account for any rental income you receive from the property you own under income from other sources.
How is HRA accounted for in the case of a salaried individual and a self-employed professional?
HRA (house rent allowance) is accounted for in the case of salaried people under Section 10 (13A) of Income Tax Act, 1961, in accordance with rule 2A of Income Tax Rules.
On the other hand, self-employed professionals cannot be considered for HRA exemption under this act, as they do not earn a salary. However, they can claim benefits on the house rent expenses incurred under section 80GG, which resembles section to 10(13A) but is subject to certain conditions.
Capital Gain
Q I sold my flat in May 2010 that was purchased in November 1990 for Rs 2.59 lakh. The selling price was Rs 45 lakh. What is the capital gain tax thereon cost inflation index of November 1990 and May 2010? When should I purchase a new flat or should I invest in capital gain to save on tax? — KB Bansal
A Note that the cost inflation index for this year has not been notified yet. However, assuming that the same would be around 670, indexed cost of acquisition will be Rs 9,50,000 approx.
Based on this, the amount of long-term capital gain would be Rs 35,50,000 approx. You need to invest the amount of capital gain in the purchase of another house within 2 years from the date of sale (or within a year before the date of sale of old flat. )
Alternatively, you can invest the amount of capital gains in capital gains tax saving bonds issued by Rural Electrific ation Corporation or National Highways Authority of India. Current rate of interest on such bonds is around 6% a year.
Q I had invested in HDFC Tax Saver and Capital Builder Fund in 2005-06 through SIP. It has appreciated decently. I am sceptical about the DTC, which comes in next year, and taxes on long term capital gains. Should I stay invested or book profits?
A You should book your tax-free profits before March 31, 2011. In case, you wish to keep your portfolio intact, you may reinvest in the very same funds immediately after the sale and claim deduction u/s 80C on newly made investment.
DEMAT ACCOUNT TRANSFERS
Q My daughter has transferred shares from her demat account to my demat account after holding it for more than one year in her account. If I sell now, what is the tax implication on the profit gained? Also, if she buys mutual fund units from her account, but on my name, and I sell it after one year, is there any tax implication?
A The period for which such shares were held by your daughter before gifting them to you will be included in the holding period. Since the total holding period is more than one year, the capital gains arising from sale will be considered as long-term. The long-term capital gains arising from the sale of shares through a stock exchange are exempt from income tax. If the mutual fund is equity-oriented, then the long-term capital gains arising from the sale of units are exempt from tax. If the mutual fund is non-equity oriented, then the long-term capital gains are taxable at a rate of 20% with indexation benefit or 10% without indexation benefit.
SHORT-TERM CAPITAL GAINS TAX FOR NRIs
Q Currently, short-term capital gains tax on sale of shares is 15.45% for non-resident Indians (NRIs). What is the short-term capital gain on the sale of shares for NRIs, according to the new DTC Bill 2010 tabled in Parliament recently? —Imtiaz Patel
A As per the proposed revised Direct Taxes Code, such short-term capital gains will be taxed as per the applicable tax slab rate. Only 50% of such short-term capital gains will be considered as taxable.
Q I inherited a DDA flat from my late sister who had bequeathed it to me through her will. My sister died in April 2008. The flat was finally transferred to me in November 2009. WHat’s my tax liability. Will there be any liability if I sell this house in future.
A There would be no tax liability in either case as long as the new house is purchased within 2 years from the date of sale or within a year before the date of sale.
Q Parameters to distinguish trader from investor
CBDT recently issued a circular to determine the frequency of transactions and volume of transactions. Will it be at the discretion of the assessing officer, or will these be quantified in terms of number of transactions per week/year and the volume per week/year?
What is the number of transactions and the volume of transactions that establishes whether one is a trader or an investor? Are there any other parameters that will be taken into consideration for distinguishing between a trader and an investor?
O RANGARAO
A Unfortunately, there is no quantifiable rule for the determining the nature of transactions. The assessing officer has to make such determination by applying his judgement in light of the CBDT’s circular.
Tax Savings Instruments - 80C/80D
QI am an MBA student. I have taken a loan from Allahabad Bank. Can I claim tax exemption on the amount in future?
A If the loan was taken for pursuing MBA course, then you would be eligible to claim deduction under Section 80E on the amount of interest paid during the relevant financial year. Deduction can be claimed for a maximum of eight financial years starting from the year in which deduction is first claimed. Q I have invested Rs 70,000 in PPF. Suggest some tax saver schemes to increase the tax benefits?
A The balance Rs 30,000 can cover children tuition fees (if applicable) or repayment of housing loan (if applicable). If neither applies to you, then you may invest Rs 30,000 either in equity linked savings scheme (which have a three-year lock-in period); or in 5-year bank fixed deposit; or in National Saving Certificate; or in 5-year post office time deposits.
Please note that out of total tax saving investment of Rs 1,20,000, an amount of Rs 20,000 is ear marked u/s 80CCF for investment in notified long term infrastructure bonds.
Q I have invested Rs 65,000 and Rs 15,000 in gold ETF and index fund, respectively. Can I claim tax benefit against these investments? If yes, then to what extent?
No tax benefit can be claimed on investment in such funds.
Q I had purchased a residential property in 2005 before marriage. I am not employed now, so my husband is repaying the housing loan. But he is not the co-owner of the property. Can he claim tax benefit U/S 80C?
A No, he cannot. He has to be a co-owner to claim the benefit.
Q Maximum PPF Investment
A In your answer on February 28, 2011, to a query from Ashok Gupta, you informed in this column that his deposit in PF accounts, including minor's, cannot be more that Rs 1 lakh in total. To this I think there is some misunderstanding. He can deposit Rs 1 Lakh in each account (his and his son's) but the tax benefit under 80CC etc. would be Rs 1 lakh only. I was depositing Rs 70,000 each in my and my son's accounts every year. The bank has never objected to that. If this is legally wrong what will happen! Can the bank refuse to give interest? BM BHAGAT
Under the clause 3 (1) of the Public Provident Fund Scheme, 1968, any individual may, on his behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (hereinafter referred to as the "Fund") any amount not more than Rs 1,00,000 (Rs 70,000 previously) in a year.
Since, you have been depositing more than what is permissible, the bank may refuse to pay interest on either of the accounts. In any case, for income tax purposes, deduction under section 80C is capped at Rs 1,00,000.
Only Rs 1 lakh in PF Scheme
Q I have two PPF accounts, one in my name and another in my minor son's name under my guardianship. Can I deposit Rs 1 lakh each in both accounts every financial year.
ASHOK GUPTA
ASHOK GUPTA
A No, you cannot deposit Rs 100,000 in each account every financial year. Under the PF scheme, total deposit in both the accounts together cannot exceed Rs 100,000 a year.
GIFT
Q My father-in-law has a plot and he wants to gift it to us. Will it qualify as a gift deed? If the property comes as a gift deed to my wife, can I go for a housing loan on my name and claim tax benefits?
A Yes, your father-in-law can gift the property to you. You can claim tax benefits on loan taken for construction of house on such plot. However, if the property is gifted to your wife, then banks would be reluctant to provide you finance for construction of the house thereon. Even if you obtain finance from the bank, you will not be able to claim tax benefits on the housing loan as you would not be the owner of the property.
NRI etc
Q I have returned from Dubai after 14 years of services. When should I declare the change of status to my bank? I have an RFC deposit with Bank of Baroda. Will the interest be tax exempt?
A Though no specific time limit has been specified, you have to intimate the bank about the change in your residential status. Interest on RFC deposit will be tax exempt till such time you maintain Resident but Not Ordinarily Resident status.
Q I am an Indian citizen and I will be working for a foreign company as its sole representative here. What would be the tax treatment of my salary?
A Taxation would be normal. However, please note that the foreign company may not deduct any taxes at source while remitting the salary amount. You will have to compute and pay taxes on your own.
A Taxation would be normal. However, please note that the foreign company may not deduct any taxes at source while remitting the salary amount. You will have to compute and pay taxes on your own.
Q
My employer pays my salary in 2 components namely (India component and US component). I was in India between October 2009 to January 2010. My payroll ran only in India and my employer paid taxes to Indian government on my full gross income of 2009-10. When I filed my taxes for the US, I mentioned double taxation in US tax filling and got foreign tax credit. I spent less than 180 days in India during 2009-10 financial year. In this case, how should I file my taxes in India for this year? Will I be entitled to full tax refund from the Indian govt?
A Being an NRI for FY 2009-10, you will be liable to pay tax in India only on your salary earned while working in India and of course on other income such as interest, capital gains, etc. earned in India. Compute your total Indian taxable income and tax thereon. If the taxes deducted at source are higher than the tax payable, then you will be eligible to claim a refund.
Q
I work for a Nasdaq-listed IT MNC. During onsite assignment I bought shares of the company through Employee Stock Purchase Plan in 2005 and 2006. I returned to India in 2006 and now want to sell the shares. Do I have to pay tax in India?
Yes, long term capital gains arising on sale of such shares would be taxable in India. The applicable rate of tax on such gains would be 20.6%. You have an option to claim exemption under section 54EC by investing the amount of gains in Capital Gains Tax Savings Bonds issued by Rural Electrification Corporation (REC) or National Highways Authority of India (NHAI) within 6 months from the date of sale of shares. However, you cannot invest more than Rs 50 lakh in a financial year in such bonds.
Alternatively, you can claim exemption under section 54F by investing the sale proceeds (of shares sold) in purchase of a residential house within 2 years from the date of sale of shares or within a year before the date of sale of shares.
Note that you will not be eligible to claim exemption under section 54F if you own more than 2 residential houses on the date of sale of shares.
Q
I am planning to sell a property in Pune for Rs 20 lakh, bought in 1985 for Rs 1.4 lakh. How should I minimise my tax liability? — Vaibhav Soman
A You can claim exemption under section 54EC (as explained in Answer 2) Alternatively, you may claim exemption under section 54 by investing the amount of capital gains for purchase of another residential house within 2 years from the date of sale of the old flat or within a year before the date of sale of old flat.
Assessment Procedure
Q My son filed his IT return online for the assessment years (AY) 2008-09 and 2009-10. He has not received any refund. What is the complete postal address of the concerned authority?
A Note that all the e-returns for AY 2009-10 are being processed at the centralised processing centre (CPC) of the income tax department at Bangalore. Further, e-returns for AY 2008-09 filed June 2009 onwards are also processed at the same centre. You can call CPC office at Bangalore on 080-43456700. The complete postal address is Income Tax Department-CPC, Post Bag No 1, Electronics City Post Office, Bangalore-560100. E-returns for AY 2008-09 filed before June 2009 are processed by the jurisdictional I-T offices. Hence, you will have to write to the jurisdictional income tax office.
Q Sincee 2009-10, I had to file my return at another ward. I have not received refund for AY 2006-07 and 2008-09. Even my letter to the ITO of the ward has not evoked any response. What should I do?
A Note that all the e-returns for AY 2009-10 are being processed at the centralised processing centre (CPC) of the income tax department at Bangalore. Further, e-returns for AY 2008-09 filed June 2009 onwards are also processed at the same centre. You can call CPC office at Bangalore on 080-43456700. The complete postal address is Income Tax Department-CPC, Post Bag No 1, Electronics City Post Office, Bangalore-560100. E-returns for AY 2008-09 filed before June 2009 are processed by the jurisdictional I-T offices. Hence, you will have to write to the jurisdictional income tax office.
Q Sincee 2009-10, I had to file my return at another ward. I have not received refund for AY 2006-07 and 2008-09. Even my letter to the ITO of the ward has not evoked any response. What should I do?
A Please write to the grievances cell of the income tax department with a copy to jurisdictional commissioner of income tax and to the ITO as well. If that too doesn’t work, you can file an RTI application.
DELAY IN FILING RETURNS
Q I am a naval officer and my TDS is deducted every month. When the new ITR forms were introduced, I found them quite cumbersome. That's the reason why I haven't filed my returns for the past four years. Is it possible to file all the returns now? I have to claim refund for all the four years. — Nitesh Garg
A The tax law allows you to file late income tax returns if you failed to file returns before the due date. The late return can be filed within 2 years from the end of the financial year. Therefore, you can now file tax returns for financial year 2008-09 and 2009-10 only. You will be eligible to claim refund of excess income tax deducted at source for both these years. Also, if the late return is filed after the expiry of one year from the financial year, you will be charged with a penalty of up to Rs 5,000 unless you provide a valid reason for the delay.
Q I am a naval officer and my TDS is deducted every month. When the new ITR forms were introduced, I found them quite cumbersome. That's the reason why I haven't filed my returns for the past four years. Is it possible to file all the returns now? I have to claim refund for all the four years. — Nitesh Garg
A The tax law allows you to file late income tax returns if you failed to file returns before the due date. The late return can be filed within 2 years from the end of the financial year. Therefore, you can now file tax returns for financial year 2008-09 and 2009-10 only. You will be eligible to claim refund of excess income tax deducted at source for both these years. Also, if the late return is filed after the expiry of one year from the financial year, you will be charged with a penalty of up to Rs 5,000 unless you provide a valid reason for the delay.
Cash Payment/Receipt - 269SS and 269T
Q My mother is undergoing medical treatment for a critical illness. My brother-in-law, is funding the entire treatment cost. I plan to repay my brother-in-law after receipt of insurance claim. Please advise if the repayment would amount to an income in the hands of my brother-in-law and be subject to tax. If so, then what papers/documents do we need to exchange, so as to avoid taxation?
A Repayment of loan will not be considered as income.
A Repayment of loan will not be considered as income.
However, you should keep in mind provisions of sections 269SS and 269T which prescribe penalties if a loan is obtained or repaid other than by way of a crossed cheque or demand draft.
(source: Economic Times - Vaibhav Sankla,15.06.2010., 27.7.2010, 10.08.2010, 17.8.10,14.09.2010 )
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