Q. My mother paid ₹50,000 TDS for FY2022-23. How to claim refund of this amount and up to how many years back one can claim refund, we haven’t claimed any refund yet.
Sai Krishna
A. Payment of TDS is being assumed as receiving TDS credit on the amount paid to your mother by a person who is liable to deduct TDS on certain nature of payments. For FY22-23, the TDS so deposited on her behalf can be claimed post filing of the respective ITR which is to be filed by July 31, 2023, as tax credit on the tax that is due to be paid by her. If there is any TDS in excess of the tax that is due, the same can be claimed as refund. Every year’s TDS credit can be claimed at the time of filing that year’s respective ITR. For FY21-22, if there is any TDS on her credit, the same can be claimed once the taxes are paid and the respective ITR is filed within the due dates of the belated return (the date of publishing of this answer is beyond 31st July 2022 which is the original due date of ITR filing). For year’s prior to that, ITR-U has been enabled to be filed for those ITRs which were not filed within the respective due dates. However, there are certain conditions in order to file ITR-U and attracts additional tax implications.
Q. I am a retired central govt. employee, aged 64 years. I want to sell out one of my properties, a vacant housing plot, to meet the expenses of my son’s education (within India). Does it attract any tax, while selling out the property and how do I indicate in the income tax, as the cost of educational fee and the price of the property are expected to match closely.
Prem
A. Vacant housing plot is considered a capital asset and selling a capital asset attracts “Capital Gains” and is to be computed as per Section 48 of the Income Tax Act, 1961. Reinvestment of the proceeds from the sale of a capital asset is exempt in a few cases when it is re-invested in a residential property and purchase of bonds subject to certain conditions. Selling of property for the purposes of meeting son’s education is not covered under any exemption and due tax applicable would be attracted on such sale.
Q. I would like to have a clarification regarding tax filing for both husband and wife/housewife. We were NRIs in the past and have retired and come for good back to India 3 years ago. I used to fund her account for domestic expenses and hence has been filing tax returns /wife’s account for past 7 years. Similarly, I am also filing returns. Since my wife’s account interest is below taxable bracket can I discontinue her tax filing?
Vijayakrishnan and Geetha
A. Under Section 139 of the Income Tax Act, 1961, a person other than a company or firm is required to furnish a return of income if the total income is exceeding the maximum amount not chargeable to tax (basic exemption limit). You have stated that in your wife’s case as the interest accrued is less than the basic exemption limit which mandates that ITR is not required to be filed for a particular year. However, as you have stated that you were NRIs in the past, it is to be checked that you do not hold any foreign assets, are not a signatory for a foreign account, or you do not derive foreign incomes in order to assess whether ITR is required to be filed or not. Further, there are certain other conditions such as spending more than ₹2 lakh in a year for a foreign trip, spending more than ₹1 lakh in a year for electricity consumption, depositing funds more than a prescribed limit in a savings bank account among others, which needs to be ascertained in order to determine whether an ITR is required to be filed. You may look into these conditions and take a call accordingly.
Q. I purchased a flat in July 2009 for ₹9,60,000. Thereafter in 2010-11, I carried out certain interior work costing me ₹1,85,000 (no bills in possession). Now, I’ve sold my flat for ₹26,00,000 (May 2022). An amount of ₹52,000 was paid as brokerage charge. Please advise me about the amount I need to pay as capital gain tax in this deal. I’ve no plan to invest in any capital gain schemes.
P.K. Suresh
A. The Capital Gains is to be computed in the following manner, first limb will consist of selling price less brokerage. Also, if the selling price is lesser than the guideline value, then the guideline value is to be replaced with the selling price. Kindly check with the Registrar’s office in order to ascertain the guideline value of the UDS. Further, you will have to ascertain the value of the building depending on the characteristics cum amenities of the building on the basis of PWD rate. Total of the value of the UDS as per guideline value and the PWD rate valuation of the building will have to be compared with the selling price.
Second limb will consist of purchase cost plus registration costs which is to be adjusted with inflation (indexation) in case of Long Term Capital Asset. This is to be done with the aid of Cost Inflation Index (CII) released by the I-T department every assessment year. In order to claim Cost of Improvement as a deduction, the cost so incurred should be capital in nature. Cost of interior can be considered if it forms part of the building and also forms part of the flat that is being sold. It is also to be seen that payment for interior can be proved with bills and also through banking channels.
The difference of the first and second limbs, if positive, is Capital Gains and if not is Capital Loss. For properties held more than 24 months, it is Long Term Capital Gains/Loss. Long Term Capital Gains attract 20% tax plus applicable surcharge and cess. If the period of holding is less than 24 months, it would be considered as short term capital gains and would be taxed as per the tax slabs of the assessee.
(The adviser is partner, GSS Associates, Chartered Accountants, Chennai)
