Monday, June 29, 2015




Chartered Accountant

A step-by-step guide to file income tax return

Query 1]
I am a salaried employee. Please explain in detail regarding procedure of filling income tax return. Also, please tell me whether I can fill it directly. Please explain in details the procedure to be followed for filing income tax return? [Amol]
With new income tax return forms now notified, here is a step-by-step guide for filing income tax returns. Income tax return filing may seem like a big deal for the beginners. However, following sequential steps would make the task easy. July 31st is normally the last date for filing income-tax return for salaried assessee. The best part is that it is extended to 31st August for the AY 2015-16.
1.      Preparing statement of income:
First & foremost, assessee should prepare the statement of income by incorporating all the income including FD/SB Interest, exempt income details, capital gain, salary/rental income, loss brought forward & carried forward, investment eligible for deduction etc. Once income statement is ready, taxpayer should compute the tax & if there is any balance tax liability after considering TDS/advance tax paid, then pay it along with interest, if any.  One should verify the tax details by downloading Form No. 26AS from which shows all the details like TDS & other taxes paid in the relevant year.
2.      Select correct ITR forms for filing:
Before filing, taxpayer should ascertain the correct ITR forms in which return has to be filed. Make sure that the correct form is chosen for filing. If the wrong form is selected, it will be considered as a failure to file returns by the IT department. For salaried taxpayer without any business income, ITR-1, 2 or 2A may be applicable. Salaried taxpayer may refer last week’s issue of tax talk dated 22.06.2015 to know more about applicable ITR forms.
3.      Procedure for filing the returns:
I] Whether to file online or physically?:
Return of income can be filed either online or can filed physically in paper format. However, e-filing is mandatory if
the total taxable income exceeds Rs 5 lakh or
b] where the individual is an ordinary resident with foreign assets/or with the signing authority in an account outside India.
c] If there is refund due in the income tax return.
Even if taxpayers don’t fall in the above category, still option to voluntarily e-file income tax return is available.
II] Procedure for filing return online:
a]  The online filing process starts by clicking the ‘register’ link at income-tax e-filing website For registration, one has to provide personal details like PAN, name as per the PAN card, father’s name, date of birth, email address and contact number. The website provides required flow to complete the registration process.
b] Download the applicable return preparation form from the website and fill in the personal information and income-related details in the downloaded form. To ensure that all columns in the return form are filled in properly, there is a process to validate the information by clicking on the ‘validate’ button on the last sheet.
c] On successful validation, access the ‘generate XML’ link in the tax return software and save the generated XML file. It is the XML file which is uploaded on the e-filing website. An acknowledgement form in ITR-V is generated on successful e-filing.
d] If the return is filed without using digital signature & without mentioning aadhar card, taxpayer would be required to take the print out of ITR-V, sign it in blue ink and dispatch it by ordinary/speed post to the Central Processing Centre (CPC), Bangalore within 120 days of uploading the return. On receipt of the signed ITR-V, tax department will send an email acknowledging the receipt of the ITR-V at the email id mentioned in the return form. There is no need to send ITR-V in the local office of the income-tax department. It may be noted that ITR-V is a password protected document & the password is PAN and date of birth in small case in continuation. [Using a
adhar number is optional as of now. The government has come up with an idea of dispensing with the formality of forwarding the duly signed ITR-V form to CPC, Bengaluru, if the taxpayer provides with the Aadhaar number at the time of filing].
III] Procedure for paper filing:
One can take the printout of the ITR form from the above mentioned website. After filling all the relevant details like personal information, income details, tax deposit details in the hard copy, one can sign & submit the same with the jurisdictional assessing officer. The receiving office at the income tax office will stamp your acknowledgement and give a copy back to you. Assessee is not required to submit any other supporting documents with the tax return. Taxpayer may check the tax jurisdiction by logging at the above quoted income-tax department website.

Query 2]
Myself and my wife are pensioners. We are filing income tax returns regularly. We are having savings bank accounts in two banks. Accounts are operated by either of survivor, first name is mine. My query is about exemption allowed on interest on savings bank accounts. If interest accrued exceeds Rs. 10,000/-, what would be tax treatment? Our SB Accounts are joint accounts .Can we show excess of Rs. 10,000/- interest amount in our return form? Please guide. [Eknath Kathale, N-162, Reshim bagh, Nagpur-]
1.      Section 80TTA provides for deduction of interest on deposits in saving account up to a maximum of Rs. 10,000/- only. Interest received over & above Rs. 10,000/- is taxable.  For example, if your interest on SB A/c is Rs. 11,000/- then at the first instance Rs. 11,000/- would be added to your income under the head “Income from other sources” and thereafter Rs. 10,000/- deduction is required to be claimed in section 80TTA under chapter VI-A.
2.      In case of joint saving bank accounts, interest would be taxable in the hands of the beneficial account holder. As a tax management measures in such cases & in view of increasing compliance burden of reporting all accounts in the ITR forms, taxpayers may now consider opting for individual account instead of joint accounts.

[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at SSRPN & Co, 10, Laxmi Vyankatesh Apartment, C.A. Road, Telephone Exch. Square, Nagpur-440008 or email it at]

Friday, June 19, 2015

Tax impact varies with Time, Place & Heads


Chartered Accountant

Tax impact varies with Time, Place & Heads

Query 1]
I purchased plot on 1st June 2006 on installment bases for Rs. 1,05,500/- & incurred Rs. 7,500/- towards registry expenses. I have sold the said plot on 23/01/2015 for Rs. 5,84,000/-. The full amount is given on 23/02/2015 for purchase of plot. It is still not registered as Release Letter (RL) is not obtained from Nagpur Improvement Trust (NIT). Please clarify the following:
1.      What is the obligation in regards Income tax?
2.      What is the time limit to show in IT returns?
3.      Any delay in registration, how should overcome this?  [CRM]
Most of the taxpayer may not know the fact that sale deed is not the only documents that give rise to taxable event in respect of property transactions. Likewise, receipt of entire consideration against sale of property may not be decisive factor for taxing the income thereon. The profit in respect of capital assets is taxable at the time of transfer. “Transfer” is a wider and broader term than mere “Sale”. For levy of income tax, “transfer” is utmost relevant. Tax impact varies with time, place, & heads of income. For the taxpayers who are not into the business of land trading / development /builder-ship, even handing over the possession of the property would amount to transfer & would attract income tax, even if the consideration for the same is not fully received or even if the sale deed is not executed.
In your specific case, it appears that you have received the entire amount against sale of plot on 23.02.2015. However, the sale deed of the plot could not be executed for some technical reasons. Since entire amount against sale of plot is received, the purchaser might have taken over the possession of the property either by executing some sort of unregistered document or through registered power of attorney etc. If so or if anyhow the possession is handed over by you in favor of the buyer, the profit on sale of plot would be liable to capital gain tax in the FY 2014-15. In such case, you would be required to show the transaction of transfer of plot in the income tax return for the FY 2014-15 only & you would be required to file your income tax return accordingly. In such case, your capital gain working would be based on the higher of actual sale consideration or government value prevailing at the time of handing over the possession of the property for levy of stamp duty. You would not be required to show the transaction subsequently again at the time of executing the sale deed of the plot & the subsequent government valuation/sale deed won’t attract additional tax burden provided that you properly document the fact of transaction in the sale deed, more particularly of handing over the possession of the property in the FY 2014-15.

If however the possession is not handed over by you to the buyer, then it would be taxable in subsequent year in which the sale deed is executed & the possession is handed over. In such case, there is no tax liability in the FY 2014-15 even though entire amount against the sale of plot is received by you. However, in such case, you may be subsequently subject to the rigor of section 50C as the government valuation of the property for levy of stamp duty shows an increasing trend year after year and your future tax liability would be dependent on the government valuation at the time of handing over of the possession/sale.
Now, what is better- whether to handover the possession of the property instantly in such case or defer the handing over the possession of the property. No standard & isolated opinion could be expressed in such case. The transaction could be planned in such a way that the tax bill of the taxpayer is minimized or linked with the cash flow of the transactions.
When the deal is finalized and entire consideration is received by the seller, then even though the sale deed cannot be executed for any reason whatsoever, it is normally advisable for the seller to handover the possession of the property by some documentary evidence so that capital gain can be booked in that year itself. This would nullify burden of Section 50C as the government valuation of the property shows an increasing trend.
But, in some cases, not handing over the possession of the property in such case could be a part of well planned tax tool by the taxpayer. For example, for saving long term capital gain tax, individual taxpayers has to invest the amount in a specified mode within specified time frame (which may vary from 6 months to 3 years). Now, this specified time frame would be commencing from the date of transfer of plot. Without repeating what has been mentioned earlier, taxpayers can plan the timing of their transactions in such a way that the condition of specified time frame is fulfilled for saving tax. While doing the property transaction, effect of income tax should not be overlooked. Right to tax planning has been recognized by the judiciary & timing of income could play an important role in managing tax impact.

[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at SSRPN & Co, 10, Laxmi Vyankatesh Apartment, C.A. Road, Telephone Exch. Square, Nagpur-440008 or email it at]



Query 1]
As per revised guidelines information about all the accounts other than inoperative is to be furnished in ITR forms. Kindly guide as to how to report in the following cases:
1.      A joint account with son & first name being of son (student). Amount remitted to this account by father, is for son's food and day to day recurring expenses for academics. Father is filing his IT return regularly.
2.      Husband & wife are having joint account with husband's name being first name. Both are filing IT returns regularly. Interest incomes pertaining to wife deposits are also credited to this account.
3.      Wife is not having any account with her name as first name. She is having only joint account with husband with second name as joint account holder.
How to show the details of accounts when they are in joint while filing individual IT returns? []
Today, it takes more brains and effort to make out the income-tax form than it does to make the income”- Alfred E. Neuman
It may be getting relevant in India too. Amidst lot of chaos & confusions, few of the income tax return (ITR) forms for the A.Y. 2015-16 are finally notified by the Government. The good news is that the deadline for filing the ITR this year is extended from 31st July to 31st August. Extension would help taxpayer understand and fill the new form properly. As far as new income tax return forms are concerned, taxpayers should take care of following changes & additional disclosure requirements:
1.      Disclosure of bank account numbers of all operational account is required in the new ITR. The disclosure is not required in respect of dormant account (3 years without transactions). No closing balance is required now, only IFS code, account number of all the current/savings account is required to be reported. Even account closed during the year is required to be disclosed in the ITR.
2.      Passport Number is also required to be furnished. The details of the foreign visits are not required to be furnished now.
3.      Presently, individuals/HUFs with income from more than one house property and capital gains & without any income from business/profession are required to file return in Form ITR-2. A new ITR 2A form is proposed which can be filed by an individual/HUF who has income from more than one house property, but does not have any income from capital gains, income from business/ profession, foreign assets/foreign income.
4.      Earlier ITR-1 could not be filed by an individual having exempt income exceeding Rs. 5,000/-. But now, new ITR-1 can be filed even if exempt income (other than agricultural income) exceeds Rs. 5,000/-.
With above generalized coverage, the point-wise replies in respect of all the issues raised by you are as under:
1.      Account details would be required to be given while filing the income tax return of the son even if he is just a student and you are remitting the amount in that account for his day to day expenses. The same account details would be required to be disclosed while filing your income tax return as well even if all the withdrawals transactions in the said account are related to your son.
2.      The account would be required to be disclosed in the return of both husband & wife both. Interest income need to be incorporated in the income tax return of wife alone as it is on the amount deposited by her.
3.      Even if the wife don’t have any account with her name as the primary holder, even then the discloser would be required in her return also.

Query 2]
I have made Rs. 10 lakh FD for 5 year in Feb 2009. It matured in Feb 2014. The bank deducted TDS every year. On filling e-return for AY 2014-15, I showed the whole interest amount in Income from other sources and claim the TDS deducted for respective years. Now I have received Order u/s 143(1) showing Tax Payable. The tax payable is sum total of TDS of previous AY leaving the current AY. 26AS shows all previous TDS. I have not declared TDS deducted in previous ITR. How should I resolve this? Kindly help. []
It appears that you have offered the interest on FDR for taxation at the time of maturity only & nothing is offered for taxation at the time of accrual on yearly basis.
The credit towards TDS is available in the year in which the related income is offered for taxation [Section 199 of the Income Tax Act-1961]. As 26AS of FY 2013-14 was not reflecting full TDS amount, your income tax return was processed without giving entire credit towards TDS claimed. You may now file the rectification application u/s 154 mentioning the fact of TDS availability in the 26AS of the earlier years & also by filling the schedule-TDS2 wherein you are advised to carefully mention the financial year & unclaimed TDS amount brought forward.
[As a general practice, taxpayers are advised to offer the income on FDR on accrual basis in view of CBDT circular. Further, taxpayers are advised to mention the amount of TDS in schedule-TDS2 - carried forward column in case assessee wants to claim the credit in subsequent years].

Query 3]
My income is mainly from interest from bank deposits and is below taxable limit. Interest is about Rs. 1.50 Lacs. I don't have PAN. Can I submit Form 15G to Bank for non-deduction of tax?  Bank said that you must submit PAN details to get interest without TDS (as mentioned in Form 15G), and can't write "No PAN". Is the bank's view valid? Please advise how to get interest without TDS. [Pawan
Form No. 15G & 15H are the most frequently used declaration form which is required to receive interest without deduction of tax at source (TDS) in respect of interest payment. However, disclosure of PAN on the form is a pre-condition for non deduction of TDS. Form No. 15G/H will not be serve the purpose of non deduction of tax at source if PAN is not mentioned thereon. Non furnishing of the PAN to the payer of interest would attract TDS @ 20%.

[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at SSRPN & Co, 10, Laxmi Vyankatesh Apartment, C.A. Road, Telephone Exch. Square, Nagpur-440008 or email it at]