Tuesday, July 17, 2012

LTCG Deduction

Question:

I Have sold an old property which has attracted LTCG tax in tune of 40 lacs.

Can I invest this amount in buying 2 residential properties to save on tax and also if i invest 25 lacs in one and 10 lacs in the other and balance 5 lacs next year as the part of installment,is it acceptable?

Answer:


You didn't mention the type of your "OLD" property.

If it is a "Residential - House/Flat" property, then you can invest the amount in buying two residential properties.

Regarding the installment:

You have to invest the remaining amount before filing your return of income:

If you sold the property before 31.March.2012 then before filing your return for AY 2012-13 on or before July 31,2012:

or if you sold the property after 31.March.2012 then before filing your return for AY 2013-14 July 31,2013.

If not, you need to invest the remaining amount in Capital Gains Savings Bonds and then withdraw at any time required for utilizing in acquisition of property.

Refer: LTCG Deduction

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Speculative Income

Question:

What is speculative income?

Give me examples of speculative incomes?

Does income from lottery or horce races treated as speculative income?

Answer:

Please refer Speculative Income definition.

Example of Speculative Income: Futures & Options (Shares, Gold etc)

Income from lottery & horse races are treated as "Income from Other Sources". They are NOT treated as speculative income.

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Sunday, July 15, 2012

Tds On Software Purchase

Question:

Can You Tell Me About Tds On Software Purchase. According To New Notification Than We Will Not Deduct Tds In Software purchase u/s 194j. Can you tell me about this condition?

Answer:

As per the Income-tax News circulated the following is the sub-section to be introduced in Section 194J.

No deduction of tax shall be made on payment by a person (transferee) for acquisition of software from another person (transferor), being a resident.

This is really a boon for the software Industry. This amendment indicates that the TDS would be required in respect of import of Software only. Any software acquired in the Domestic industry, would not attract TDS.

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Revision of Income and TDS cert on pre-mature withdrawal of FD

Question:

I had an NRO FD paying a quarterly interest of 9.25% pa. On June 1, 2012 I redeemed the FD pre-maturely.

The bank adjusted the interest payments (August 2011 to 31 March 2012) by applying a revised interest rate of 8% pa and further I had to pay a penalty of 1%.

Should the bank be sending me a re-adjusted TDS cert. to confirm the revised income earned for FY2011-2012?

Answer:

Once the Accounts for the Financial Year is closed, and Audit has been completed, the banks will not revise it's accounts.

As per the information provided by you the bank has already issued the TDS Certificate. This indicates that the bank has paid the TDS to the Government.

Hence, the excess interest would be reversed only in the current financial year and the net interest earned would be certified by the bank in the current year TDS Certificate (FY 2012-13). Therefore, the Bank will not send the revised TDS Certificate for the financial year 2011-12.

However, you can file your return of income by adjusting the income accrued to the actual interest income given by Bank and claim refund, if any, of the TDS in excess of your Tax liability.

In this case, you run the risk of explaining your Assessing Officer, why the interest income was reduced than that given in the TDS Certificate.

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Tuesday, July 3, 2012

MAT Example Calculation

Question:

What is MAT? How MAT Is Calculated? Give me an Example?

Answer:

You can find MAT Calculation here.

You can find MAT Example Calculation here.

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Friday, June 29, 2012

Tax on Long Term Capital Gains and 54EC

Tax on Sale of Residential Flat

Question:

Mr. "A" sells a residential flat of 1300 sqft. @Rs.1200/-per sqft which is the court valuation too as on that date i.e Dec 2011 to Mr. "X".

Mr."X" takes registration on March 2012 when the court valuation is Rs.1500/-. All payments by cheque are made on the earlier date i.e. Dec2011.

My Questions:

Which rate of sale will be taken by the tax dept.?

If the deal gives a Long term Capital gain of Rs.8lack of the total relisation of Rs.15.60 lack, then what amount should be locked in Highway bonds to save LTCG.?

Answer:

It is not clear whether the Court is the "stamp valuation authority" for your State. In case the Court is the stamp valuation authority in your State then the rate of Rs.1,500 would apply.

For claiming benefit under section 54EC, the entire capital gains of Rs.8 Lakhs should be invested in Highway Bonds.

Read more about 54EC.

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Is Commission received from Foreign Companies Taxable?

Tax on Commission Received From Foreign Companies

Question:

I am freelancer export professional from India. I get commission in USD from foreign company for business done in foreign countries.

Do I need to pay any tax in India for such earning?

Both buyer and seller are from foreign countries and having no office in India.

Answer:

In case you are resident in India, your Global income is taxable in India.

In case you are non-resident or a resident but not ordinarily resident, carrying on the business of commission agent outside India, then the said income may not taxable.

Hence, you have to pay tax on commission earned by you, if you are resident in India. It will be taxed as "Business Income".

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Retirement Benefits in Income Tax Return Form

Retirement Benefits - How To Show In Return Form

Question:

I have received considerable amount as retirement benefits on my retirement on 30.11.11 from Govt. Deptt. in the form of Gratuity, GPF, Commutation, Leave Enchashment, GSLIS, etc.

All this is tax free. But how to reflect this amount in the return form Sahaj 1?

Answer:

You need not disclose the "tax free retirement benefits" in SAHAJ 1. You can just mention the net taxable salary (after deducting exemptions) in " Income from Salary / Pension" column.

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Certificate from CA for LTCG Calculation

Is it mandatory to get Certificate from CA for LTCG Calculation?

Question:

I have calculated LTCG by using correct indexation and it comes out to 20 lakh, I purchased a flat of 18lakh. Now 2 lakhs is my LTCG.

So is it necessary that i visit any CA to certify my calculations ?

Answer:

It is not required to get certification from CA for LTCG calculation.

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TDS on Business Income

Sale is more than 60 Lakhs. When to deduct TDS?

Question:

I am an individual doing business. I was having sales below 60 lakhs in the financial year 2010-11 and I was not deducting TDS on payment or bills.

In the year 2011-12 the sale is more than 60 lakhs and liable to TAX audit. Now I have to deduct TDS. The sale of Rs.60 lakhs is crossed from January 2012. From which date TDS is to be deducted.

Answer:

You can start deducting TDS from 01-April-2012.

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Service Tax and TDS on Income from House Property

Do we need to pay Service Tax and TDS on Monthly Rental Income?

Question:

My mother who is not having taxable income, wants to letout part of her residential property for commercial purpose on monthly rental basis @21000/-

You are requested to advise what will be the tax liability on this amount under various heads and any service tax is to be paid for that? What about the TDS for this amount?

Answer:

Service Tax is applicable only if the service turnover is more than Rs.10 lakhs. In your case the turnover would be Rs.2,52,000. So if this is the only turnover she will not be liable to service tax.

Again, if this rent is the only turnover earned by her, then TDS is not applicable.

The amount Rs.2,52,000 would be treated as "Income from House Property". You can claim standard deductions as given here.


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Stop Filing IT Return

When Can I Stop Filing It Return?

Question:

I was involved in propritory business , and had filled ITR4 2012-13.

Now I am stoping this business .

When should I stop filling the ITR 4.

Answer:

When you close any business you have to intimate the Assessing Officer within 30 days of such closure. You have an option to file the return immediately on closure or to wait for the end of the financial year, i.e., immediately following 31st March.

For the year, in which you have closed the business, you need to file ITR4. If you do not carry on business or profession in the subsequent years, you can discontinue filing ITR-4.

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Income Tax Calculation For Part Stay In India And Part In Us

Income Tax Calculation For Part Stay In India And Part In Us

Question:

My son has been deputed to US for one year approx. This one year period spreads from February to next February/March approx. Initial February & March falls in the current fin.year.

Apart from salary in India upto Jan, Feb & March(paid in March itself)salary and income tax deducted at source is shown in the current financial year and in Form 16 also.

But practically his salary for Feb & March are not credited in Indian Bank A/c. (Some equal amount might have been given in US) After going to US for the Feb & March Some tax is recovered in US.

The question is whether he can submit his IT return in India with the salary figures (including Feb & March) and Form 16 as is being done in earlier financial years?

His stay abroad in current financial year is 53 days approx (feb 21 days and march 31 days).

If so, is there any way to get refund of what he has paid in US?

Answer:

As your son is Resident in India, he has to pay tax on the entire salary in India.

He can very well claim relief for double tax paid (one in India and US) under the Double Taxation Avoidance Agreement between India and US.

You can submit the relevant papers showing tax paid in India and US to the person who is filing your son's return, who will help you in this regard.

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Long Term Capital Gain Deduction

LTCG

Question:

I purchaged a piece of 66decimal land in 1988 ,by Rs.16000. Then took a house building loan Rs.5 lakh for an estimate 7 lakh in 2009.

Now i sold vaccant 33 decimal for Rs.25,00000 and repaid rest Rs. 360000 to bank to clear loan.Now ,what will be my LTCG and how much to invest to enjoy 54EC.

Answer:

Your LTCG would be 24,60,993.79. For the calculation we assumed the date of purchase as FY 1988-89 and Date of sale as FY 2011-12.

Please use our online LTCG Calculator to find the exact LTCG. Or provide me with actual date of purchase and sale in dd/mm/yyyy format.

You can invest up to 50 Lakhs in 54EC.

Refer http://www.accounting-n-taxation.com/Long-Term-Capital-Gain-Deduction.html

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Tax Benefit of Purchasing a Car for Business

What is the tax Benefit of Purchasing a Car for Business Purpose?

Question: If company purchase the Car for business purpose then wht is the tax benefit for the company..?

If the company purchase a car for business,

  1. They can claim "Depreciation".
  2. If they have taken any car loan for purchase of the car for business purpose, they can claim 'interest paid against the car loan'.
  3. They can also claim all expenses related to the car like gas, repair, maintenance, insurance, and loan interest paid.

I suggest you to take proper consultation from a tax consultant before you proceed further.

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