My father is over 80 years outdated and his earnings for monetary yr 2020-21 is as follows: short-term capital achieve of ₹1.2 lakh; long-term capital lack of ₹1.1 lakh; financial savings account curiosity of ₹4,000; mounted deposit curiosity of ₹20,000; NRI present acquired of ₹10 lakh; and resident Indian present of ₹2 lakh.Does he must file earnings tax return? If sure, during which kind? Can we set off the short-term capital achieve with the long-term capital loss? Should we present the financial presents within the earnings tax return? If sure, beneath which head or a part of the shape?
—Anil Jain
We have assumed that your father is an Indian tax resident and isn’t into common buying and selling in shares. The good points have, subsequently, been assumed to be within the nature of capital good points.
As per provisions of earnings tax regulation, long-term capital loss (LTCL) may be set off solely in opposition to long-term capital achieve (LTCG). Accordingly, the LTCL incurred by your father won’t be eligible to be set off in opposition to short-term capital good points (STCG). Your father can carry ahead the LTCL for eight FYs instantly succeeding the present FY and set off the identical in opposition to future LTCG.
To allow your father to hold ahead the LTCL, he shall be mandatorily required to file his earnings tax return (ITR) inside the prescribed tax submitting due date.
Where a present is acquired from a specified relative, the transaction of the present itself won’t give rise to any earnings tax implications within the arms of the receiver (i.e. your father). However, in case present(s) are acquired from non-relatives and the combination of such presents exceed ₹50,000, the whole quantity acquired shall be topic to tax in India.
Accordingly, taxability of the presents acquired shall be decided based mostly on whether or not or not the present has been given by a relative of your father.
From a disclosure perspective, the taxable quantity of present is required to be reported as earnings beneath Schedule OS in Form ITR-2. Non-taxable presents needn’t be reported within the ITR.
Also, please observe {that a} deduction of as much as ₹50,000 is accessible for curiosity earnings for senior residents (on each mounted deposit and financial savings curiosity). As your father’s whole curiosity earnings is ₹24,000, a deduction of the whole quantity shall be obtainable.
Generally, a resident particular person who’s of the age of 80 years or extra is required to file a tax return in India if his taxable earnings (previous to prescribed deductions) exceeds ₹5 lakh, topic to sure different exceptions not relevant within the on the spot case.
In your father’s case, if the full earnings (after contemplating taxable presents) exceeds ₹5 lakh and/or your father desires to hold ahead the LTCL, he can be required to file his tax return.
Further, as per the earnings sources supplied, your father can be required to file his ITR utilizing Form ITR-2.
Parizad Sirwalla is accomplice and head, world mobility companies, tax, KPMG, in India.
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