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June 22, 2000

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"Can one file returns over the Internet?"

The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask.

Can one file their returns over the Internet? If yes, how does one do it?

K Sundaram

One of the major impediments in implementing e-filing the returns is the digital signature. The Income Tax Act provides that all returns should be verified i.e. signed by the assessee. This being the condition, electronic signature is a must for e-filing. This will happen when the E-Commerce bill is passed.

I am reasonably conversant with advance taxes and the need to pay them after estimating your annual income in advance. But, on March 31, I sold some shares in the stock market after banking hours. I made a profit on this sale. Since the decision was made on the spur of the moment, I had not factored this in my estimated annual income and not paid any advance taxes on the same. What will be the ramifications in such an event? Will I be given any benefit of doubt or concession?

Partha

Under section 234C of the Income Tax Act, 1961, no interest will be levied in case of shortfall in payment of advance tax if such shortfall is on account of capital gains (short or long term) and such advance tax is paid in the next installment of advance tax or where there is no remaining installment, then before the end of the financial year.

Further, if the advance tax paid by you is more than or equal to 90 per cent of the assessed tax, then you are not liable to any interest under section 234B of the Act. However, if such advance tax is less than 90% of the assessed tax, then you will be liable to pay interest @ 1.5 per cent for one month.

In your case as the sale has taken place after regular banking hours, you may deposit the tax amount on the subsequent working day. You will have the Broker's contract note to evidence the date and time of the transaction in case of any query from the I.T authorities.

Alternatively, to avoid the liability of tax you may take benefit of certain exemptions available under the Act and thereby avoid the liability to pay advance tax. The following methods could be adopted if you are interested in saving capital gains tax.

If the shares sold by you are long term asset, you could invest in section 54EA, EB investments (for sale upto March 31, 2000). Such investments have to be made within 6 months of end of financial year.

If the shares sold by you are long term asset and if you do not have any residential house property, then you could place the amount in Capital Gains Account Scheme (CGAS a/c) with any nationalised bank and utilise the deposit towards the acquisition of a residential property. This deduction is u/s 54F of the Income Tax Act, 1961.

My family owns two flats on the same floor of our building. A tax consultant informed my brother that he is liable to house property income tax. This is apparently because he has more than one house. Could you confirm this?

Ravichandran

The tax consultant your brother met is right in saying that your brother will be liable to tax of income from house property for one of the flat.

Generally in a co-operative housing society, units or flat numbers are distinct. However, if both the houses bear a single number or are purchased through a single composite agreement, then these flats would not be considered as two separate flats for the purpose of income tax. However, often two adjacent flats are acquired and are converted into single flat, in such cases these flats would be considered separately since there would be two agreements for sale. In such case your brother could consider one house property as self occupied house property and the other house would be deemed to be let out and taxed accordingly. There are certain deductions that you can claim under section 23 and 24 of the Act for municipal taxes, repairs, interest on housing loan etc.

Under wealth tax too one HP is allowed as SOP but other HPs are considered as wealth that could attract tax if the value of such wealth exceeds the limit specified therein (Rs 15 lakh currently).

I am a qualified engineer employed with a MNC in their Safety Department since April 2000. I own a house in Mumbai. My company's rules stipulate that I have to be available around the clock. Hence, they have provided me with a house adjacent to the factory. My office accountant dropped hints that this might cause problems in my getting benefits under HRA. What is the tax implication?

Pravin

If you are paying rent for the accomodation provided to you then you are eligible to claim exemption on account of HRA. If the same is a company owned or rented accomodation and if the same is provided free of cost or at a concession, the house provided by your employer may be considered as a perquisite and taxed in your hands.

Excess tax paid will result in refund of money to the tax payer - but, when? Secondly, if you get refund, does one assume that the case for that particular period is closed - meaning, if presume that possibility of irregularities exists in that particular year & a refund is granted, can the tax payer assume that he has successfully managed to close his file in that year?

P P Nair

Refund of excess tax can take place in two situations:

  • A claim for refund may be made in Form No. 30 duly verified in the prescribed manner. Such refund should be claimed within 1 year from the last day of the assessment year.
  • A refund may also be granted by the ITO as a result of an order or completion of assessment.
Coming to the second part of your query, it is not necessary that the file be closed once refund is received. The commissioner has the right to revise an erroneous order prejudicial to the interest of revenue.

Also, the assessing officer may reassess any income if has reason to believe that such income has escaped assessment. The assessing officer may also call for such information and evidences as he thinks is necessary in order to satisfy himself that the assessee has not understated the income or overstated the loss. Notice in such cases are generally issued subject to the time limit specified in the Income Tax Act, 1961.

I am a software engineer working in Pune. I would like to know if these figures are right or are they not applicable in Pune? Conveyance allowance: Up to Rs 800 per month
Food allowance: Up to Rs 840 per month
Medical allowance: For specified illnesses subject to submission of proof of payment
House rent allowance: Based on your salary breakup
LTA: Once in two years using the modes specified for such purpose and subject to submission of proof/evidence
Education allowance: Up to Rs. 50 per child per month for maximum two children
Refresher courses/training expenses: Subject to submission of proof

B Kumara Swamy

Yes the above non-taxable allowance and perquisites are available to all resident Indians (salaried employees). The refreshment expenses are to be directly paid by the employer to the caterer. This may be in the form of food coupons or vouchers also. Also, in case of medical expenses, reimbursement of upto Rs 15,000 is exempt from tax on production of supportings.

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