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tax return and magnifying glass

tax return and magnifying glass  

At the time of payment of advance tax, you have to be careful in choosing the correct assessment year.

Q. My wife and I have separate PANs and file income tax returns separately. My wife has no income per se but taking a PAN and filing ITR were done to facilitate domestic use as I was an NRI then. Now, I have returned to India and am paying taxes/ filing ITR of my own. Is it feasible to discontinue with my wife’s ITR in this context?

Vijay Krishnan and Gita

A. An individual is not required to file an ITR if he/she does not have any taxable income in a particular assessment year or if income does not exceed the maximum amount which is not chargeable to tax. However, it is advisable to verify the 26AS of that assessment year in order to ascertain if any amount is credited by way of TDS (for NRIs, TDS will be deducted by the bank even for SB interest unless the bank is informed of the change in the status of residency) and accordingly file the ITR even if the basic exemption limit is not exceeded in order to claim refund and also to avoid any notices from the department due to mismatch between TDS records and non-filing of ITR.

Q. I'm a senior citizen aged 64. I own a flat that I had purchased in 1989. Now, I want to sell the flat and buy a new one. In view of my age, I wish to buy the flat in the name of my daughter. Can I save capital gains tax by investing the sale proceeds in purchasing the new flat in my daughter’s name?

V. Ayyappan

A. Under Section 54 of the Income Tax Act, an assessee can avail the benefit of capital gains on selling one residential property and using the proceeds to purchase another residential property in India. Thus, the new residential property must be registered in your name in order to avail the exemption. This view can be deduced from a plain reading of the legislature. However, contrary views have been adopted by certain appellate forums of the department and High Courts wherein exemptions were extended to the spouse of the assessee, considering the section to be beneficial in nature and must be viewed in a such manner. Although such a stand has not been established in a father and child relationship, you may consult your auditor in this matter to seek further guidance before the sale is done.

Q. I satisfy the conditions for making payment of self-assessment tax and for the past three assessment years, I have been making payment in one lump sum before filing the return. I would like to know whether it can be paid in instalments (may be one or two payments in a month) before filing the return?

I would also like to mention that I paid one instalment on April 5,2020 for AY 20-21.

N. Venkatesan

A.Yes, self-assessment tax can be paid in instalments; it is advisable to file the return after payment of all the self-assessment instalments. It is worthy to note that the payment of self-assessment tax can be made only after April 1 of the concerned assessment year; (ie for the Assessment Year 20-21, self-assessment tax can be paid only from April 1, 2020).

Further, you also have the option of paying income tax in instalments for a particular assessment year based on an estimation of tax liability by way of advance tax. Though there are provisions in the Act requiring only certain assessees to pay advance tax in instalments, you may still pay advance tax in your name for a particular assessment year depending on your fund flows and availability. At the time of payment of advance tax, you have to be careful in choosing the correct assessment year.

(The author is partner, GSS Associates, Chartered Accountants, Chennai)

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Printable version | Jul 11, 2020 4:55:07 PM |

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