'National Pension Scheme is introduced to cover every individual; the Atal Pension Yojana, on the other hand, is introduced keeping in mind the retirement needs of the unorganised sector.'
Anil Rego, CEO, Right Horizons, answers your personal income tax queries.
Tunky moi: My mother bought a shop for INR 80,000 in 1996 at Vijay Nagar, New Delhi.
She is now selling the shop for INR 10 lakh, can she use the excess /capital gain to buy a residential property? What is the capital gain tax implication in this case?
Anil Rego: Yes, she can reinvest the capital gains to buy/construct a house within 2 years if you are buying a house (3 years if the house is under construction). The period mentioned is from the date of the sale of the property. If the full capital gains are reinvested in a house (which is likely considering a new house is likely to be of a higher value than her capital gains), she can fully avoid the tax.
poonam jayantilal poladia: I had purchased a flat in the month of Oct 2019. Now as I was going to shift to a new house as per my planning on May 2020 latest. Also to add here I am staying in my present owned house which I wanted to sell once my 90% interior work would get finished in the month of April 2020 as per my plan.
Now the whole situation got changed due to Covid 19. Due to Covid, I could not continue the work for three months and by which now my selling of flat got delayed. I was not allowed to call any person or due to covid issue regularly my building was sealed. Now as I am in Dec 2020 and pursuing to sell my flat on an urgent basis by which I may have also to reduce the price of my flat.
The problem is the capital gain as I had taken a loan of the same amount as my present flat and then was going to repay the same. But as per my CA, he has told me now you will have to pay the capital gain as one year has passed away.
So now my problem is that the value is too high and as due to covid I couldn't sell my flat and also the value has come 10 to 15 % less. So the overall loss will be high. Can you guide me is there any government notification for this kind of cases and also anyway to get the capital gain issue settled without paying the same.
Anil Rego: The date for making investment/ construction/ purchase for claiming roll over benefit/ deduction in respect of capital gains under sections 54 to 54GB of the IT Act was extended till September 30, 2020. Unfortunately, you will have to pay tax as this extension does not help you much based on your circumstances.
RAJENDER KHURANA: I am retired service officer, earning my pension and income from FDs/saving instruments etc. I have also been investing in MFs in the last three years. I purchase MFs online direct, primarily INDEX FUNDs -- NIFTY 50 Plan and Sensex Plan. So far I have not sold any of these MFs.
I have filled up ITR 1 for F.Y. 2019-20, with assistance of a C.A. But I have some doubts. Please educate me on following:
(a) whether the investment made in the MFs should have been reflected in this year IT Return, or I have to reflect only when I sell these.
Anil Rego: Tax incidence on MFs happens only when you sell the funds. However, in case of income higher than Rs 50 lakh, one needs to provide details of assets held in your ITR. If you fall under that category, then you would need to show it as part of your assets. But this is only a disclosure and again no tax needs to be paid.
(b) Is ITR-1, correct or should I have filled up ITR-3?
ITR-1 is correct. However, when you make any sale of mutual funds it would be treated as capital gains. You would need to use ITR-2 if one has capital gains.
(c) If I have made a mistake, shall I modify my return for the year?
Anil Rego: Not required to modify your return.
Shivendra Yadav: I am a salaried individual. My Total taxable income for FY 2018-19 was Rs 4,60,000, on which I paid tax of Rs 10,920.
My current year (FY 2019-20) taxable income is Rs 5,01,000, which include arrear of Rs 40,000 of FY 2018-19. If I avail relief under section 89, for total arrear amount. I have to pay tax Rs 2,080. But if I avail relief under section 89 for only Rs 1000 of arrear amount then tax payable will be only Rs 52.
Is there anything wrong in the latter case?
Anil Rego: Yes, you can claim relief under Section 89. Since you are on the margin, it is better you can get your computation validated by a CA with all your details.
arunachalam viswanathan: I have a query. The proceeds of money received on Buyback of shares of a Company is not taxable in the hands of the investor as per Sec 10(34A) along with Sec 115QA of IT Act. But I am not able to find a place in the ITR Return (ITR-2) to show such income. Please inform me under what head it can be reported. The above Sec 10(34A) is missing inside the drop down box provided under the Exempt Income in the ITR-2 Form. Please clarify.
Anil Rego: You can claim in schedule EI. You can consult a CA to help you on the same.
DIPAK JAMBUSARIA: I have multiple folios in same scheme of a mutual fund. If I consolidate holding in one folio will there be any tax implication?
Anil Rego: No. Consolidating holdings in one folio will not attract any tax as it will not be treated as a sale transaction.
SUDHIR TALEKAR: I am working with Ultratech Cement Co. Ltd, Age 24 years. I want to check with you that Can I join both National Pension Scheme (NPS) and Atal Pension Yojana (APY) at the same time?
Please guide me. Thank you.
Anil Rego: Yes, an individual can enroll under both National Pension Scheme and Atal Pension Yojana at the same time if you meet the basic criteria of each. The age eligibility criteria for NPS is between 18-65 years of age whereas for APY an individual must be between 18-40 years of age.
National Pension Scheme is introduced to cover every individual; the Atal Pension Yojana, on the other hand, is introduced keeping in mind the retirement needs of the unorganised sector.
Do you have any personal income tax query? Please mail us at email@example.com with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.
Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.