Can reporting international shares as per calendar 12 months create discrepancy whereas claiming TCS, TDS return?

Foreign investments are required to be disclosed in schedule international property (FA) as per calendar 12 months, not like all different disclosures which can be completed as per the monetary 12 months. This would imply that for the evaluation 12 months 2023, taxpayers ought to have declared international investments completed between 1 January 2022 and 31 December 2022 of their earnings tax return (ITR).

Delhi-based Akhil (who declined to offer his second identify) did simply that. He declared all his international shares purchased till 31 December 2022 and unnoticed these purchased in February this 12 months. But, when he claimed a refund on the ₹20,000 TCS (tax assortment at supply) that was deducted on the shares that he purchased in February, it led to a discrepancy. “I acquired an intimation from the I-T division that stated the gross receipt/earnings in opposition to which tax has been deducted at supply must be entered within the related schedule. My CA (chartered accountant) didn’t discover any such irregularity besides the international shares purchased after 31 December 2022 that I didn’t disclose. The CA has revised the ITR and disclosed these shares too,” he stated.

Mayank Mohanka, founding father of TaxAaram India and a associate at SM Mohanka & Associates, stated this discrepancy might have risen as reporting is being completed as per calendar 12 months whereas TCS is mirrored in Form 26AS as per the monetary 12 months. “Though you’re required to report international shares purchased from January onwards within the subsequent evaluation 12 months, you’ll have to declare refund for transactions completed until 31 March this 12 months itself in any other case the credit score will get lapsed,” he said. Currently, investing in foreign stocks attracts 5% TCS. The TCS rate will be hiked to 20% on transactions done after 1 October (subject to exemption limit of ₹7 lakh).

However, Mohanka added that this shouldn’t have happened as TCS on foreign remittance has to be claimed in the same year and is not related to income from foreign assets.

Prakash Hegde, chartered accountant, Acer Tax & Corporate Services LLP, concurred and added “TCS is not linked with income. When you have to claim a refund on the 1% TCS deducted on a car bought for personal use, you’re not required to declare the expenditure in the ITR,” he stated. “This might play out with TDS that’s deducted by the employer on ESOPs (worker inventory choices) obtained from the international father or mother firm when they’re exercised as that must be declared as earnings.”

The current assessment year is the first time ITR forms categorically asked for foreign stocks disclosures until 31 December. Until last year, disclosures had to be done as per ‘accounting period’, but in the absence of clarity on what accounting period meant, most taxpayers declared foreign assets as per Indian financial year. Mohanka said though this is a genuine irregularity, taxpayers who have foreign investments shouldn’t revise their returns unless they get an intimation from the tax department.

Gautam Nayak, partner, CNK & Associates LLP, added “These could just be erroneous intimations, as we saw mistaken notices were sent to many taxpayers with respect to Section 80P deductions,” he stated.

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Updated: 11 Sep 2023, 10:56 PM IST