Do you have any personal income tax query?
Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, will answer your queries.
Please mail your queries at firstname.lastname@example.org with the subject line Ask Mihir.
Swadhin Sahoo: I am a senior citizen retired pensioner.
I had intention to sell my both properties located in one town and to invest in one property in another town where I wanted to settle in my retired life. I wanted that the sale proceeds of my two properties should be almost same as the purchase value of a single property in another town to settle there.
I had bought a property in 2015 at Rs 40 lakh in my single name and sold in Feb 2022 at Rs 52 lakh. The buyer deducted 1% TDS and filled in form 26QB and I got form 16(B) from buyer and details of TDS are seen reflected in my Form-26AS.
Thereafter, my 2nd property that I had bought @Rs 7.3 lakh 20 years back, was attempted to dispose, but did not materialise till now.
Anyway, I bought a 5-yr-old jointly owned property from a couple at Rs 80 lakh in June 2022 and deducted 1% TDS (@0.5% from each owner), filled in Form 26QB and provided form 16(B) to the sellers.
So, I invested the sale proceeds of my 1st house 'within a year' of its disposal, in buying a house from Long Term Capital Gain point of view.
My IT Return for AY 2022-23 was filed in July 2022 and it got approved. The 1% TDS deducted by buyer on my 1st property sale got refunded/ adjusted.
I am still trying to sell my 2nd property 'within one year' of buying the June, 2022 property. I want to do this to take benefit of Long Term Capital Gain Tax.
I want to know whether I am going to get the IT benefit by selling my 2nd property 'within one year' of purchase of my June 2022 property ?
I am more eager to know how sale of 1st property in financial year 2021-22 (Feb.'22), purchase of a property in FY 2022-23 (June'22) and again sale (proposed) of 2nd property, (all within 2 years from LTCG point of view) are shown in my next IT Return (AY2023-24).
I am eager to hear from you, Sir!
Mihir Tanna: As you must be aware, if person wants save tax on capital gain, person should acquire another residential house within a period of three years from the date of transfer of the old house or should construct a residential house, within a period of one year before or two years after the date of transfer of old house.
With effect from Assessment Year 2021-22, the benefit in respect of investment made in two residential house properties is available. The exemption for investment made, by way of purchase or construction, in two residential house properties shall be available if the amount of long-term capital gains does not exceed Rs 2 crore.
If assessee exercisesoption, he shall not be entitled to exercise this option again for the same or any other assessment year.
Benefit will be lower of following:
- Amount of capital gains arising on transfer of residential house; or
- Amount invested in purchase/construction of new residential house property
If till the date of filing the return of income, the capital gain arising on transfer of the house is not utilised (in whole or in part) to purchase or construct another house, then the benefit of exemption can be availed by depositing the unutilised amount in Capital Gains Deposit Account Scheme in any branch of public sector bank, in accordance with Capital Gains Deposit Accounts Scheme, 1988.
So in your case, if you satisfy all the prescribed conditions (including acquiring new property within 3 years, depositing unutilised amount in capital gain deposit account and disclosure is made regarding same in ITR of AY 2022-23 & AY 2023-24); you will get IT benefit.
Dev Chunky: I've seen your answers to tax queries raised by readers of rediff.com and find your answers quite useful. I too have a question in this regard, which I've asked below.
I was an NRI working abroad at a startup in the UK during which time I vested stock options as part of my compensation. I returned to India about 2 years ago and now my tax status is an Indian resident.
The startup has gone public in the UK stock market now, and I would like to know if I have to file/pay advance tax when I either exercise & sell and/or only exercise these stock options, OR, can I just file my return as usual in the next financial year before the 31-Jul deadline as usual?
Mihir Tanna: Income earned by resident (anywhere in the world) is taxable is India. Accordingly, when you exercise option, you have to pay tax on fair market value of shares reduced by amount paid by you and you have to make disclosure in ITR. Again at the time of transfer of ESOP, taxability will arise on consideration received on transfer reduced by the fair market value at the time of exercise of option.
Sunil Sitaram Ohekar: I am staying in India from around 4 years and working as a consultant in a Mexican Company (previously I was residing there, but now working from India) and getting income from Mexico. I am also paying tax on my abroad income I am getting in my NRO/ NRE account with Axis Bank.
I want to know if I am an NRI or Resident Indian?
Whether, I can open Mutual Fund account with NRI status or Resident India status?
What will be the tax implications?
Please guide me as I am not getting proper explanation.
Mihir Tanna: Based on available details, you seem to be resident and ordinary resident for income tax purpose.
You can always check status at calculator provided at income tax website (external link)
Accordingly, you should inform bank about change in residential status immediately and change the type of account (NRO/NRE Account).
Also you have to open account as resident for MF and tax implications will arise at the time of transfer of mutual fund units. Tax rate will depend on type of fund (equity based or debt based) and period of holding.
Mutual funds whose portfolio’s equity exposure exceeds 65% are equity funds.
Equity funds held for 12 months or more are considered as long term, whereas it is 36 months in case of debt funds.
Short term equity funds are taxed at 15% and debt funds are taxed at slab rate.
Long term equity funds are taxed at 10% (if capital gains of exceeds Rs 1 lakh) and debt funds are taxed at 20% after indexation.
Manish Rakundla: I have a query regarding PPF. I am 50 years old. I have a PPF account.
I started a PPF account in my daughter's name as well when she was minor. Her PPF account is under my guardianship.
Can I invest 1.5 lakh each in both the accounts, or, I can only invest cumulatively 1.5 lakh?
Mihir Tanna: As per rule 3 of PPF, any individual may, on his behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund with any amount not less than Rs 500 and not more than Rs 1.5 lakh in a year.
So you can invest Rs 1,50,000 cumulatively.
Read more of Mihir Tanna's responses here.
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