10 important income tax queries (India) answered

It is income tax filing season and everyone must be having queries or questions on income tax returns and income tax filing.

Here are some income tax queries in India answered. This is only in the Indian context and should not be used as income tax queries for other countries.

Let us know if you have any other clarifications and we will be happy to answer them for you.

Query 1

Can money paid to your employer for serving notice period be excluded for calculating one’s net taxable income ?

Answer : No, while calculating the net taxable income, the employee cannot get rebate for notice period payment served with the employer. Whatever money has been paid to the employer is actually taxable.

Query 2

Suppose you have two DEMAT accounts. One has your wife’s name on it along with yours, so essentially it is joint. The other has only your name on it. If you were to transfer shares from the first to the second, will you attract any capital gain tax?

Answer : You will not attract any capital gains tax if no money has been paid for the transfer, i.e., the transfer will be considered as a gift from your spouse, which is tax-free. It will be taxable for the individual who purchased the shares that are now being transferred.

Query 3

You have two houses. One is rented out while the other is self-occupied. The self occupied one has a home loan on it which fetches a tax deduction of Rs 1,50,000 on the interest paid. Will you get a higher tax benefit if you were to rent out this house too?

Answer : Yes, in case of a rented house, one can claim the total interest accrued for the year as a deduction and there is no upper limit. Rs 1,50,000 is the limit for a self-occupied property only. Note we are taking about interest portion of the loan only and not principal here.

Income-Tax-Queries

Question 4

You are  irregular in filing your income tax returns though your income tax returns has been deducted at source for all years. What can happen ?

Answer : The I-T department can ask for records of the previous six years preceding the relevant financial year. Not filing returns can attract a penalty of up to Rs 5000. If there is any undeclared income, then the penalty varies between 100% to 300%.

Question 5

You are salaried and TDS has been deducted from your salary. But you did not get your Form 16. So you do not know whether tax has been deducted and paid to the IT department or not. What do you do ?

Answer : You can view your tax credit on form 26AS on the I-T department’s website. If the tax has been deducted and not deposited, then first  write to your employer to correct this. In case no action is taken by your employer, write to the I-T department.

Question 6

You have bought several equity diversified mutual funds through SIPs over the last few years. If you sell these, how can you classify the capital gains (short term or long term) for tax purposes?

Answer : All SIP investments are treated separately for tax purposes. If you sell now and the profits from equity investments are more than a year old, then they are treated as long-term capital gains and are exempt from tax. However, if the gains from SIPs are made in the past 11 months, these will be taxed at 15%.

Question 7

You did not file your tax by 31 July.  Can you file a delayed return to get a refund, if applicable ?

Answer : You can file delayed returns for up to two years from the end of the financial year. If all the taxes have been paid or deducted then you will not have to pay a penalty but you will not be eligible for a refund.

So essentially, you can claim a refund only if you have filed your return by the due date, that is, 31 July.

Question 8

You are a NRI and have a bank account in the country abroad. Is the interest earned by the deposits in this account taxable in India?

Answer : The interest earned by your deposits in the abroad bank account will be taxable in India only if it has been received in India. If the interest has been credited to your abroad bank account, the interest will not be taxed in India, it will instead be taxed in the country abroad.

Question 9

If you gift your wife some money and she invests it in shares, will the capital gain be treated as hers or mine?

Answer : If you gift money to your wife and she invests it, the capital gain from the investment will be clubbed with your income and you will have to pay tax on it.

Question 10

You want to gift your wife some shares. Will either of you have to pay income tax? If your wife sells these shares, how will the profit be taxed?

Answer : You will not have to pay tax when you transfer/gift shares to your wife. The shares can be transferred from your demat account to your wife’s demat account. You should prepare a gift deed listing the shares and their present value. If your wife sells these shares and earns capital gains, the profit will be treated as your income.

Comments

  1. if i make fd’s in name of my wife, can she file her IT return for interest earned. Or it will add to my income.

    • Praneet says:

      Show the amount invested in your wife’s name as a loan from you to your wife, In that case, your wife will have to file the return in her name, otherwise the income will be clubbed with your income.

  2. sunil pasricha says:

    1. Employer issued tax sheet and as per sheet deductions u/s 10 was allowed but employer did not provide from no. 16. Can the Assesses claim deduction u/s 10 provided as per tax sheet. Please advise and let us know and judicial pronouncement if available. The Assesses is in default on lapse of employer. Can the employer take the benefit of innocence as the fault lies with employer and not with employer?

    2. Can exemption be claimed as per tax sheet where employer has not provided Form No. 16 as this Company has gone sick please quote authority of supreme Court & High Court.

    3. Proof of Cash Credit Could Not be Furnished before A.O. The Appellate Authority CIT (A) did not entertain the Proof of Deposit. Can fresh evident be given in appellate tribunal as the loan was taken through A/c Payee’s cheque from existing assesses we need judicial Pronouncement.

    4. “A” Salary Person working with King Fisher as Pilot Inspite of number of Requests did not received form no. 16. But received the tax sheet where deduction allowed u/s 10 were made but the Assessing officer while framing assessment demanded form no. 16 which the King Fisher Company- did not provide to the assesses. The assessing officer made disallowed on this score. Please Suggest the remedy with support of Judgment Favoring the Judgment assesses pronounced by High Court and Supreme Court.

    “B” The Assessment during the Assessment Year in Question Received Loan of Rs. 260000/- through account payee cheques from existing Commission agent, Income tax assesses. During the course of assessment the assesses could not disclosed the name of person from whom that was received. The A.O added the same to the income of assesses. The Assesses went in appel with CIT (A). Who also up holded the addition with the peea that this Information was not given to A.O. Please Suggest the Remedy in Tribunal with court Authorities

  3. HUF landed property sold for 50 lakhs. after paying long term cap gain at @ 10%, can balance be distributed amongst coparceners under sec 10(2) of the Act >

  4. HUF landed property sold for 50 lakhs. After paying long term cap gain tax @ 10%, can balance be distributed amongst coparceners under sec 10(2) of the Act >

    • Praneet says:

      No. It can only be distributed when there is partial or full partition of the HUF. If there is no partition, the amount will have to be kept in the HUF account until there is partition of the HUF.

      Here is an extract of the provisions

      Types of partitions:
      1. Total Partition – It is the type of partition in which the entire family property is being divided amongst the coparceners. After the total; partition takes place, the HUF ceases to exist. All property is being divided among the coparceners of the Hindu Undivided Family.
      2. Partial Partition – It is the type of partition which is partial as regards either the person constituting the joint family or as regards the properties belonging to the joint family or both. In case of partial partition, some coparceners may separate from the joint family but other members continue to be a part of the joint family. In this case as regards the property, there may be a division or severance of interest in respect of some part of the estate of the joint family, while the rest of the estate may continue to remain as a part of the property of the joint family.
      Effect of partial partition after 31st Dec, 1978 – If any partial partitions have been affected after 31st Dec, 1978 there will be no taxation aspects in it. If any partition occurs after 31st Dec, 1978 then no claim of such partition shall be recorded by the Assessing Officer. Such families will be assessed as if no partition has been taken place. Every member of HUF, immediately before such partition, and the HUF shall be jointly and severally be liable for any sum payable under the Act. The several liability of a member would be proportionate to the share of joint family property allotted to him on such partial partition.
      Assessment after Total Partition – When a claim of total partition of HUF has been made by any member of the HUF on behalf of the HUF, the assessing officer shall enquire upon it. For this he shall serve a notice to all the members of HUFs and shall enquire whether total partition has taken place and if so on which date it is affected. If partition has been affected in the previous year, the total income of the HUF of the previous year up to the date of partition shall be the total income of the HUF. Every member of the HUF shall be jointly and severally liable for the tax on such assessed income of the HUF. The several liability of a member would be proportionate to the share of joint family property allotted to him on such partition.

  5. if i transfer my money to my wife and make fd on my wife name and the fds interest is below tax limit for ladies, will i or my wife has to file income tax returns….

  6. if i transfer my money to my wife and make fd on my wife name and the fds interest is below tax limit for ladies, will i or my wife has to file income tax returns….please clarify

  7. Hi
    I took a construction loan from SBI in month of April 2013. My pre-EMI will be started from June 2013. The project is likely to complete by January 2014.
    But until now I am staying in a rented house. I will be paying full EMI from Feb 2014 onwards which comes within the current financial year. I shall also get house completion certificate from bank by then. As I am currently staying in rented house, and also going to get the possession of the house within the same current financial year, can I get the tax benefit for both house loan and rent?
    Please advice.
    Thanks

  8. A.A.Newalkar says:

    I am in service with Pvt. company. I am eligible for LTA. I have not availed the same since the year 2008 till date. Now I want to avail the tax free LTA of 2008 & 2009. can I get the same tax free under the current Income tax law.

    If not then to get the tax free LTA, for which year I should avail?

  9. SURINDER PAL SINGH says:

    I HAVE FILLED I TAX RETURN FOR A Y 2012-13 MANUALLY IN I TAX OFFICE KHANNA DISTT LUDHIANA (PUNJAB). SO FAR I HAVE NOT RECD. REFUND. CAN I FILE THE SAME RETURN OF A Y 2012-13 ONLINE TO GET REFUND EARLIER?

  10. Sanjay Pote says:

    As a RNOR ( status ) Interest earned from FCNR deposits is exempt from Tax in India .
    How about interest earned from NRE deposits when status is RNOR ??
    NRE deposits run till maturity . As also NRE depsosits and interest earned is fully repatriable .

  11. Aloke Roy says:

    I have got an intimation u/s 245 regarding outstanding demand of tax for the AY2003-04.I have paid the tax amount.I have got the photocopy of the challan but the original copy of the challan is misplaced.Shall I have to pay tax again? Kindly advise.

    • MANISH TIWARI says:

      NO U CAN CHEQUE UR CHALLAN STATUS IN VIEW 26AS STATEMENT IF IT SHOWS THEN PRINT AND GIVEN TO UR ASSESSING OFFICER IT WILL BE TREATED THAT U HAVE DEPOSITED THE CHALLAN

  12. I have’t declared my rental income for 5 years. Is their any provision to pay tax on rental income for past 5 years….?

  13. MANISH TIWARI says:

    I AM A CLOTH COMMISSION AGENT MY TOTAL COMMISSION INCOME IS RS. 800000.00 CAN I FILE ITR 4S

  14. RAHUL YADAV says:

    I have rented one floor against which housing loan is taken but living in parents house and paying monthly rental to them . Both properties are in Delhi . Under what circumstances can I claim benefit of both HRA as well as housing principle & intererst . Pls guide ?

  15. Dr.Anirudth says:

    Sir,
    I’m going to work for two organisations as a full time salaried employee. Will there be any issue in getting two Form 16s ? Will there be any issue in working for two organisation simulatenously ? Please let me know

    • Hello Dr,

      There is no issue of you working in two organizations simultaneously.
      As long as you can get Form 16 from your employer you should be good.

  16. Adil khurshid says:

    My total Annual salaried income is Rs. 1,87,000/ and i have been paying insurance premium 28,500/- also paying education loan installment of 3,700/PM have I to pay income tax, if not is it necessary to return file for me, i am having PAN also…

    • @Adil,

      Do you have any other source of income? If not I think you don’t need to pay any tax.
      Download an online tax calculator and you can check for yourself.

    • Praneet says:

      As a matter of prudence, you should file the return but if Rs. 1, 87, 000 is your Gross Total Income then you are not legally liable to file you IT Return.

  17. Today is 18 july 2013.
    I have forgot to file income tax returns for my financial year 2010-2011.
    Can I file it now?

    Regards,
    Vish

  18. firdoash says:

    While paying tax on Bank FD i have mentioned the Assesment year as 2012-13 for the financial year 2012-13.
    Background: i have form 16 from my employeer and there i am paying 19500 as tax for the year.
    What i can do in this regard? Do i have to pay the tax again and file the ITR?

    • TheWealthWisher says:

      So your employer has paid tax on your salary/earnings to the govt but not on the FDs which you might have. So if your questions was whether you have to pay tax on FDs, yes you have to and then file IT returns. Sorry if your query was something else.

  19. I have not paid my insurance for 2012-2013 . I have paid it in July. It is not present in my Form 16. Can i claim the same for my tax returns of 2012-2013 ?

  20. kulwant Singh says:

    Dear Sir i want to ask right now i am on rent in Mohali and am paying my rent month on month and now my Tenant says you have to pay house tax too but i can not understand because this rent is income of my tenant why should i pay house tax he said me that you have to pay 7.5% of house tax of your total rent please advice me what i have to do?

  21. parthiban says:

    Iam a railway employee i have to get a refund amt. of Rs.5000/- from Income Tax. I received a message on 09.12.13 from the income tax dept. C P C , that ITR V for 2013-14 has been received and accepted. I want to know when i will receive that cheque or whom to contact for it.

    • @Parthiban,

      Usually the refund takes 3-6 months. In most cases it would be credited to your account which you have mentioned in the ITR.

  22. Hi

    My company provides Perquisite on Car. But the car is registered on my spouse name. So how can I claim exemption on this.

    Thanks,
    Aruna Varanasi

  23. I was a salaried person working in an Indian MNC where I was frequently required to travel on company related work. The company re-imbursed me for travel expenses on actuals on submission of receipt. Recently I got an IT query where-in I was asked the details of these payments by my company. I submitted a letter from my company stating that these are travel related re-imbursements but the IT official refused to accept it in absence of actual receipts which I dont have anymore as I submitted them for getting re-imbursements. Do I have a chance of success if I appeal against the order?

    • Praneet says:

      Shantanu, please get in touch with a qualified Chartered Accountant for this problem. He/She might be able to help you better than anyone.

  24. Dear Sir,

    I have taken a concessional housing loan and as per income tax rule i have been charged with the differential rate as per SBI Lending Rate and added to my gross salary .
    Now after adding that amount whether i can claim the Benefit of Housing Loan exemption .

    Regards
    Vijay

  25. kalyanasundaram says:

    my wife received from her own brother some company shares as a gift.if she sells the same shares will it attract capital gains tax as per indian it laws?

  26. Query1: I transfer substantial party of my Salary Income to my wife Bank account. Total interest earned by my wife is around 5000 in year 2014.
    Please advise if the interest income earned on my wife’s bank account is taxable?

    Query2: – Some of the money transferred by me to my wife’s account has been utilized by opening De-Mat account in my wife’s name and she has earned some profit in it
    Period of holding is less than a year. My wife has not yet taken out money from her De-Mat account, instead of that, she has re-invested money in some other stock.
    Please advise if the re-invested money is taxable ?

    Query3:- Please advise if I can set of capital gains made by my wife through capital losses incurred by me by way of buying and selling stocks?

  27. I’m salaraied person, but i was not in job for last 1 year, means i do not have income from Apr’13 to Mar’14. I was filing inc tax return till last year from 2008 onwards every year. I filed ITR-2 last year as I have house property and I am paying loan for that. Should I file return this year also (if so how) or should I submit any proof / doc / letter for ‘no income’. Pl can you guide?

  28. I purchased first home in Mumbai in 2008, the home loan for this property was repaid in 2010. I occupy this home.
    in 2011 I purchased 2nd flat in Mumbai with a home loan, I have rented out this flat. I get Rs. 20K as rent and I pay EMI of Rs. 86K for this flat. I have currently only 1 home loan for the 2nd flat.
    I have 2 questions:
    1. What is the tax benefit I will get in this scenario?
    2. Someone has suggested me not to pay prepayment and take benefit of interest that I am paying for this home loan.
    Request your advice.
    Thanks

    ALok

  29. For the purpose of calculating taxability of Leave encashment on retirement, is the employee of public sector bank considered as Govt. Employee ? Please clarify with case law if any.

  30. DS SANDHU says:

    DEAR SIR,PL .LET ME KNOW I.T. IMPLICATIONS ON BUYING A VEHICLE WORTH RS.9 LAKH IN CASH IN THE NAME OM MY SPOUSE.WE BOTH FILE ITR . REGULARLY. RECENTLY I HAVE BEEN A RECIPIENT OF RS. 5 LAC FROM LIC AS MATURITY CLAIM.THANKS

  31. My daughter got Rs. five lacs as alimony in divorce matter. She is govt employee. This amount is exempt from income tax. Pl let me know the section of IT under which is so. Also let me know if we can ignore to mention this money while filing the ITR. Or we can even inform the IT department later.

  32. Rahul Pai says:

    Dear Sir I have a query, I would be pleased to have your reply.
    Presently I am a karta of a huf which was opened by my father, he passed ten years ago, sister has got married, now my family has grown with wife and child. How can I incorporate them into the huf. what would the status of my present huf.

  33. Pankaj Sood says:

    Can the tds deducted by govt. Office on payment of land acquisition/enhancement in name of deceased and payment released to his legal heirs by a court be claimed by his legal heirs by asking for tds certificate in the name of his legal heirs who received the payment from the court.

  34. Hi,

    I have purchased a flat last year, in which the broker through which I have purchased flat returned me rs 35000/- as discount from his commission and deducted 10% as TDS. Now while filling quick return on income tax website, that TDS is showing up as my income from other sources.
    Please let me know, that discount I received is taxable or not, and do I need to show that as my income from other sources (in that case I have to pay additional tax, as I am in 20% slab), or I should claim for return of that TDS.
    Please assist me.

    Thanks,
    Rahul

  35. I worked and got salary in Singapore and income tax was deducted/settled by Singapore govt at the time of return. Is it mandatory to declare this income in India during filing income tax return?? If I don’t mention the foreign income in Income tax return as tax is already paid in Singapore…will there be some problem in future??

  36. In AY 2013_-14I did not opted for sec 44ad for my business income.can I adopt sec 44ad for AY 2014-15,I

    • Praneet says:

      @ankit Yes you can adopt the provisions of Sec 44AD for the AY 2014-2015, provided you are eligible.

  37. Hi.

    I have lost my form 16 A for the assessment year 2014. I have been trying to contact the company where I used to work, for a duplicate copy but they haven’t responded to my calls.

    I was wondering if the form 26AS downloaded online that shows all my tax statements – can be used to file my tax return? I don’t however have details like, TDS certificate number.

    Can I still go ahead and file my tax return?

    Let me know soon! Thank you for your time!

    Priya

    • Praneet says:

      @Priya Well Priya, you need the TDS Certificate Number when you are filing your return so you need to contact the company ASAP to get a duplicate TDS certificate. If you are filing your return online and you don’t type in your Certificate No. the utility will not accept your return.

  38. Aloke Roy says:

    If my taxable income including short term capital gain from share is less than the taxable limit,then shall I have to pay tax for the short term capital gain(15%)?

  39. Dear Sir/Madam,

    I have a query about income tax.

    I had booked a flat in Bangalore in year 2011. The total value that I

    am paying for the flat is Rs. 32 lakhs. Now in Year 2014, the flat is

    ready for registration.

    The builder is asking me to pay the registration charges on Rs. 32

    lakhs. However, in the registration document, they are stating only

    Rs. 3 lakhs.

    When I contacted the builder, they are saying following:

    “Since construction of the apartment is through a works contract,

    where we have acted as contractors, … there is no requirement to add

    the construction value to the sale deed. However as per stamp duty

    regulations, we will be declaring the guideline value the apartment

    and stamp duty is payable on such value”

    Effectively, they are saying that Rs. 29 lakh is the cost of

    construction and though I have to pay stamp duty on it, but they won’t

    mention it as amount paid in sale deed.

    The property is located in Bangalore (Karnataka)

    Question:

    a) Is the stand taken by the builder correct?
    b) If so, and I go by their statement, then say after 10 years, I sell

    the flat for Rs. 50 lakhs. What will be treated as my capital gain –

    Rs. (50 lakh – 3 lakh) = 47 lakh OR Rs. (50 lakh – 32 lakh) = 18 lakh

    Your help will be greatly appreciated.

    Thank you and best regards,

    Vj

  40. I had taken a housing loan of 15l in 2007 and was paying interest as the loan was disbursed in instalments. The final EMI started in 2009. Then, in 2013 I had the loan enhanced to 21L and the EMI commenced immediately since the full amount was disbursed at once. I have received possession of the house in Jul 14. Now, if I understand correctly, I am supposed to total up the entire interest amount from 2007 upto Jul 14, divide it by 5 and include that amount in my income tax rebate claim in this FY and the next 4. What happens to the principal amount from 2008 till 2014? Also, how am I supposed to handle the principal and interest amount starting Aug 2014? The interest part is more or less clear – I am to claim rebate from Aug 14 to Mar 15 under Section 24. Am I supposed to claim rebate on the principal from Aug 14 to Mar 15 under Section 80C? If someone can please guide me on this, I’ll be very grateful.

  41. N.Krishnan says:

    I file ITR2 since I own a joint property co-owned with my brothers. I am not on good terms with three of my brothers and I have no way of getting their PAN numbers which is a must in filing return. I can either show my portion of the rental as 100% and not show the house as co-owned. Or I should not show this income at all. What should I do.

  42. I currently need to pay a certain amount of money for one of the houses that ive booked. However, im currently going through a financial crunch and am unable to pay off the amount. If incase I borrow this amount from a relative, and upon selling another property pay it back to the relative, am I entitled to paying tax for the same?

Speak Your Mind

*