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Tag: capital gains

  • Does repaying a house mortgage with MFs enable tax exemption on capital beneficial properties?

    New Delhi: When you promote capital property like shares, mutual funds (MFs) and gold, utilizing the sale quantity to purchase a house exempts you from paying tax on the capital beneficial properties made. This tax break is offered beneath part 54F of the Income Tax Act.

    There are three key circumstances to qualify: the asset whose sale proceeds are to be invested needs to be held for the long run, the home have to be purchased one yr after or earlier than promoting the principle asset, and you need to not personal a couple of home on the time of sale of the asset.

    However, this isn’t as easy an answer as a result of Section 54F places a number of circumstances.

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    In this story, Mint addresses the intricacies of Section 54F in a query and reply format.

    Can I take advantage of the sale proceeds to pay an present dwelling mortgage?

    Prakash Hegde, chartered accountant, Acer Tax & Corporate Services, mentioned tax payers can use the sale proceeds to repay a house mortgage and get exemption so long as the opposite circumstances are being met. “If the home property is bought or constructed inside the specified interval (earlier than or after the sale of shares/MF), regardless of the aim for which the proceeds are utilised, exemption could be accessible,” he mentioned.

    For instance, if you happen to purchased a home with a mortgage two years earlier than promoting the principle asset, say shares, you’ll not get exemption on capital beneficial properties tax if you happen to use the sale proceeds of shares to pay the mortgage. However, if the identical home was purchased inside one yr earlier than you bought the shares, you possibly can declare exemption on LTCG tax to be paid on the shares.

    What if I promote my shares as a single holder and need to purchase the home in joint possession?

    You will get exemption, nonetheless, the acquisition value for calculating exemption is not going to be the total quantity. The normal rule beneath 54F is that one should use your complete sale quantity, and never simply capital beneficial properties, to purchase the property so as to declare exemption. When the property buy value is lower than the full sale quantity of the capital asset, you get a deduction on a proportionate quantity of capital beneficial properties. “In case of joint possession, it’s higher to contemplate your share just for computing capital beneficial properties,” mentioned Karan Batra, managing associate, Chartered Club.

    What if I promote shares that have been in joint possession and need to purchase a home as a single proprietor?

    In this case, you need to use the sale proceeds that you simply obtain in proportion to your possession to say exemption. For occasion, if you happen to maintain 50% possession in shares, you need to use half of the full gross sales proceeds to reinvest and declare exemption.

    If I deposit sale proceeds from shares in a Capital Gains Accounts Scheme (CGAS), do I nonetheless have to disclose it in ITR?

    No, it’s not required. The concept behind depositing the sale proceeds in CGAS is to order the cash for buying a home and to not pay tax on the beneficial properties if you happen to intend to buy the home after the Income Tax Return (ITR) submitting due date. However, you need to reinvest the sale proceeds in a property inside a yr of promoting the principle capital asset, else, you’ll have to pay capital beneficial properties tax later.

    Are registration and stamp obligation included in calculating buy value of the brand new home property?

    Yes, registration and stamp obligation make up the full buy value of a property. “Any bills incurred solely for the acquisition of the brand new asset are factored into the asset’s value. This consists of bills comparable to stamp obligation, registration costs, brokerage charges, and the like,” mentioned Neeraj Agarwala, Partner, Nangia Andersen India.

    Will I be eligible if I take advantage of the sale proceeds to reconstruct an present home?

    Agarwala mentioned the reconstruction or renovation of an present home is just not lined beneath part 54F. This is as a result of plain studying of part 54F within the Income Tax Act means that the exemption is allowed on buying a brand new asset. “…the assessee has, inside a interval of 1 yr earlier than or after the date on which the switch passed off bought, or has inside a interval of three years after that date constructed, a residential home (hereafter on this part known as the brand new asset)…” the Section reads.

    If I personal a home and one empty plot on the time of promoting my shares, and want to purchase one other home with the sale quantity of shares, will I be eligible for exemption?

    Yes, on this case sale proceeds of shares can be eligible for exemption, mentioned Batra. “IT legal guidelines don’t deal with plots as residential property. So, within the above case, the taxpayer primarily owns one home and therefore, is eligible to say exemption on capital beneficial properties tax by shopping for yet one more home. They may construct a home on the plot and declare exemption,” he mentioned.

    Are NRIs eligible?

    NRIs are eligible to hunt tax exemptions beneath Sections 54 and 54F if the home property is purchased in India. “It is essential to notice that the vendor can not use the proceeds to purchase a residential property overseas whereas nonetheless claiming the exemption,” mentioned Agarwala.

    Also Read: How shopping for a brand new dwelling can prevent capital beneficial properties tax on shares, mutual funds

  • How will my spouse’s curiosity revenue be taxed?

    How will my spouse’s curiosity revenue be taxed? | Mint

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  • How income made on shares listed on Nasdaq underneath ESOP are taxed?

    Question: I’m an Indian resident employed with an Indian subsidiary of a US-based guardian firm listed in NASDAQ. The guardian firm has supplied us with shares via ESOP schemes. Will the income made on the sale of those shares be taxable in India? If sure, what are the holding interval necessities for short-term and long-term capital beneficial properties and the tax charges for short-term and long-term beneficial properties on this case? Can we take the good thing about price inflation indexation right here?

    Answer: Any revenue arising on the sale of shares allotted to you underneath the ESOP or any comparable scheme is taxed underneath the pinnacle “Capital Gains” in India. Since the shares allotted to you might be listed on Nasdaq and never in Indian inventory exchanges they’d be offered on that inventory change and wouldn’t be subjected to Securities Transaction Tax (STT) and due to this fact provisions of Section 111A and 112A is not going to apply. The income made on such shares shall be taxed as long-term capital beneficial properties if these shares are held for greater than 24 months. You are entitled to say indexation for computing the long-term capital beneficial properties. 

    Long-term capital beneficial properties are taxed at a flat 20% after indexation. If the shares are offered inside 24 months, the income shall be taxed as short-term capital beneficial properties. The short-term capital beneficial properties are handled like your common earnings and get taxed at a slab price relevant to you

    The holding interval shall begin from the date of allotment of the shares and never from the date of allotment of the ESOPs. I presume your employer had deducted/collected tax on the distinction between the honest market worth of the shares and the train value on the date of allotment. So whenever you promote these shares, the honest market worth of such shares on the date of allotment shall be handled as your price. Any extra realised over such price shall be handled as capital beneficial properties.

    Balwant Jain is a tax and funding professional and will be reached at [email protected] and @jainbalwant on his X deal with.

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    Updated: 20 Sep 2023, 08:38 AM IST

  • How are shares gifted to your partner taxed?

    I wish to present my spouse shares value ₹4 lakh. Who will bear the capital positive factors tax in that case?

    —Akash Jain

    Any present of shares to a specified relative doesn’t entice tax within the fingers of recipient. As partner of a person falls underneath the outlined ‘relative’, there is not going to be any tax implications in your spouse’s fingers on account of receipt of shares as present from you.

    However, because the shares are completely funded by you, in case your spouse subsequently sells the gifted shares (leading to capital positive factors or loss) or earns any dividend from the shares, clubbing provisions underneath the earnings tax legislation shall be attracted. Accordingly, any capital positive factors/ losses arising to your partner from sale of the gifted shares can be clubbed in your earnings and taxable in your fingers. The tax implications in your fingers would proceed to rely upon components equivalent to interval of holding, whether or not these are listed or unlisted shares, and many others.

    I purchased a DDA flat in 1989. In the occasion of my dying, my son will inherit it. If he decides to promote it, what would be the tax liabilities, together with capital achieve, on the proceeds obtained by the use of a cheque. What are the choices to avoid wasting tax?

    —Gurcharan

    Any achieve/ loss arising from sale of such inherited property by your son, shall be chargeable to tax as ‘capital gain/loss’ in his fingers within the yr of sale.

    Where the property has been held for greater than 24 months previous to sale, the identical can be thought of as a long-term capital asset and any achieve / loss arising from its sale shall be thought of as long-term capital achieve/loss (LTCG/ LTCL). For calculating the interval of holding of such inherited property, the tenure for which the property was held by you shall even be included.

    LTCG can be calculated because the distinction between the sale consideration and listed price of acquisition and enchancment. Cost of acquisition within the fingers of your son shall be the precise price of the property in your fingers as elevated by any price of enchancment if any.

    As the property has been acquired previous to 1 April 2001, the honest market worth of the property as on 1 April 2001 or the unique Cost of acquisition and enchancment, as per possibility of taxpayer, shall be thought of for the aim of indexation and computing capital positive factors. LTCG is taxed on the fee of 20%, plus relevant surcharge and cess.

    In case of LTCG from sale of residential property, the next exemptions could also be availed by a person taxpayer:

    Under part 54 of the Act—by investing the LTCG in buy or development of a brand new residential home located in India. Additional situations associated to interval of funding, quantity of funding, variety of properties already held, sale of latest asset, and many others., must be complied with.

    Under part 54EC of the Act—By investing the LTCG in specified notified bonds (as much as a most of ₹50 lakh). Additional situations talked about above must be complied with.

    Parizad Sirwalla is companion and head, international mobility providers, tax, KPMG in India.

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    Updated: 06 Aug 2023, 09:56 PM IST

  • HDFC merger: tax implications for shareholders

    The document date for the merger of HDFC Ltd with HDFC Bank was 13 July. The document date is the deadline set by an organization to find out the eligibility of shareholders to obtain dividends and distributions. As per the share trade ratio of the merger, for each 25 shares of HDFC, 42 shares of HDFC Bank have been issued to the previous’s shareholders. If we break this all the way down to per share stage, one can say that the ratio is 1.68 shares of HDFC Bank for each 1 share of HDFC.

    Shares are thought of capital property underneath earnings tax (IT) regulation, and any achieve on their sale is handled as capital features. However, within the case of a merger, the IT regulation doesn’t take into account the swap of shares as a switch, making certain that it’s tax-neutral for shareholders. To qualify for this tax-neutral profit, the merger should meet sure standards. First, all property and liabilities of the amalgamating firm have to be transferred to the amalgamated firm. Second, a minimal of 75% of shareholders (in worth) of the amalgamating firm should change into shareholders of the amalgamated firm. The case of HDFC Bank qualifies for each of those situations.

    Capital features on sale of shares is calculated on the idea of the holding interval and the date of acquisition of shares. If somebody receives shares as a part of a merger, the holding interval is counted from the date of buy of the amalgamating firm’s shares (HDFC Ltd on this case).

    Let’s perceive this with an instance. Suppose you got 30 shares of HDFC Ltd on 1 April 2019 at ₹2,000 per share, thus spending ₹60,000. As per the share trade ratio upon merger, you’re entitled to obtain 50.4 (42/25*30) shares of HDFC Bank. But since there isn’t any idea of fractional shares in India, you may be issued 50 shares of HDFC Bank. Further, as per the Bank’s BSE announcement of 14 July, the share allotment train has been finished and the itemizing of those shares is underneath course of.

    Now, let’s assume these 50 shares of HDFC Bank are listed on the exchanges on 17 July at ₹1,700 per share. Further, assume you promote these 50 shares on 1 August for ₹1,800 per share which makes the entire gross sales consideration to be ₹90,000. This sale transaction can be topic to capital features tax.

    In the case of listed firms, fairness shares held for greater than 12 months are categorised as long-term capital property, whereas these held for a shorter interval are categorised as short-term capital property. In the above instance, the holding interval is from 1 April 2019 to 1 August, making the features long-term capital features.

    The value of buy of shares of HDFC Ltd can be taken to be the price of buy of shares of the HDFC Bank (amalgamated firm). In this instance, the price of buy of fifty shares of HDFC Bank obtained on merger shall be ₹59,524 ( ₹60,000/50.4*50). This adjustment to the price of buy is completed as in opposition to the unique value of HDFC Ltd share entitlement of fifty.4 shares. Accordingly, there can be a long-term capital achieve of ₹30,476 ( ₹90,000- ₹59,524). One essential factor to notice right here is that the good thing about grandfathering may also be obtainable in circumstances the place shares of the amalgamating firm have been bought on or earlier than 31 January 2018.

    As for the 0.4 fractional entitlement, because it is not going to be given as a share, the shareholder can be paid consideration in money or type. This can be taxed as capital features because the shareholder has not obtained shares in lieu of shares and so, not like the swap of shares on a merger, no tax profit is given right here. In our instance, your fractional entitlement was 0.4 shares. Let’s assume that on the day you’re paid for the fractional entitlement, the worth of 1 share of HDFC Bank was ₹1,820. The capital achieve on the fractional entitlement would be the worth of 0.4 shares, i.e. ₹728 ( ₹1,820*0.4) as diminished by the price of buy, i.e. ₹476 ( ₹60,000/50.4*0.4) which comes out to be ₹252. Rules of the holding interval to categorise it as long-term or short-term will apply as talked about above.

    Sambhav Daga is companion at Sunil Johri & Associates

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    Updated: 16 Jul 2023, 10:26 PM IST

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  • How to report overseas shares in your earnings tax returns

    Taxpayers must mandatorily declare all their overseas belongings within the earnings tax return (ITR) and that features overseas shares as properly. So, even a person who has a taxable earnings beneath the essential exemption restrict of ₹2.5 lakh however holds, say, a Tesla or Apple inventory within the US will nonetheless must file the ITR simply to reveal this inventory holding.

    Foreign shares must be declared within the ITR yearly so long as they’re held in your identify and never simply report the capital beneficial properties or losses whenever you promote them. “Disclosing possession of overseas belongings and reporting earnings from these belongings are two totally different necessities within the ITR. Both have to be accomplished,” said Suruchi Mahajan, a Bangalore-based chartered accountant and owner, Suruchi & Co.

    The failure to declare international stocks, or any foreign asset such as real estate, bank accounts, bank deposits, insurance policies and other financial assets can invite scrutiny by the tax department under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

    “The Foreign Asset Investigation Unit (FAIU), a newly formed wing set up under the Income Tax Act, will investigate information received from foreign jurisdictions under the Tax Information Exchange Agreements (TIEA),” stated Deepak Kakkar, a Delhi-based chartered accountant and senior supervisor, Jaikumar Tejwani & Co. LLP.

    You may even be slapped with a ₹10 lakh penalty for every of the years that you don’t disclose the belongings. Foreign belongings are declared in schedule FA (Foreign Assets) in ITR-2 or ITR-3.

    Taxation

    When a overseas inventory is offered after two years, the beneficial properties comprised of it are handled as LTCG, or long-term capital beneficial properties, and taxed at 20% (surcharge further), with indexation profit, in India. Short-term capital beneficial properties (STCG) are taxed at your earnings tax slab charges. There isn’t any tax legal responsibility on capital beneficial properties abroad.

     

    Dividend earnings earned on overseas shares is taxed at tax slab charges in India. In the US, when the dividend is paid, a flat 25% is withheld as tax. India has a Double Taxation Avoidance Agreement (DTAA) with the US by way of which you’ll declare the tax paid within the US to offset your tax legal responsibility in India on the time of submitting ITR. “To declare credit score of overseas taxes paid, one has to fill type 67 earlier than submitting the ITR. It ought to be accomplished within the yr of accrual. Accordingly, type 67 is required to be filed every year when the taxpayer desires to say overseas tax credit score,” said Vishwas Panjiar, Partner, Nangia Andersen LLP.

    Tax reporting

    Disclosure of foreign stocks starts right from the year in which they are bought. These are to be declared in table A3 under Schedule FA and the values are to be declared in rupees (the Indian currency) after conversion and not in the foreign local currency. The standard practice is to convert as per TT (telegraphic transfer) buying rate of the State Bank of India (SBI).

    When you sell stocks, these should be reported under “sale of equity share” to calculate the capital beneficial properties and web tax payable on them. Do notice that conversion will occur on the web beneficial properties. “First calculate the beneficial properties within the native foreign money after which convert it into rupees. It could be inaccurate to first convert price of acquisition and value of sale in rupees after which calculate the beneficial properties/losses,” said Kakkar.

    Reporting of dividends in the ITR is slightly complex. Dividends should be reported as income from other sources in the year in which these are paid and applicable tax should be paid on it. Panjiar pointed out that dividend is taxable in the year of accrual and does not necessarily depend on repatriation of the same in India.

    In cases where tax is withheld in the country where the dividend is paid, the tax paid should be claimed as a deduction in your ITR in India to avoid paying double tax.

    For instance, let’s assume you hold stocks of a US company and it has paid a dividend of $5,000, out of which $1,250 (25%) is deducted as tax in the US. Consider that you are in the 30% tax bracket and your total taxable income is ₹20 lakh, which includes the dividend income ₹4.1 lakh ($5,000 converted in rupees as per the prevailing rate). Your total tax liability will be ₹4.12 lakh. However, you can claim the amount ( ₹1.02 lakh) deducted as tax in the US while filing the ITR and your net taxable income will come down to ₹3.1 lakh. However, this can only be done if you submit form 67 before filing the ITR. Also, the extent of deduction or credit will not exceed your tax liability in India, said Kakkar.

    Suppose, in the above example, if you are in the 5% tax slab and your total income is, say, ₹5 lakh, your tax liability would be ₹12,500. Setting off the tax paid in the US will make your tax due in India zero but you will not be reimbursed the remaining ₹89,000 (arrived by substracting the ₹12,500 tax liability in India from ₹1.02 lakh paid in the US).

    Dividend is to be declared at two places in the ITR, explained Mahajan. “Dividend is reported under ‘income from other sources’ and the tax liability is determined. Separately, when you declare equity shares in schedule FA, there’s a section that asks whether you have earned income on this asset. You have to disclose the dividend payout here as well.”

    The similar applies to shares as properly. In the yr a inventory is offered, the sale proceeds ought to be declared within the FA schedule beneath ‘total gross proceeds from sale or redemption of investment during the period’. But, the complete particulars additionally have to be reported beneath the capital beneficial properties part individually.

    It ought to be famous that even when dividend is reinvested, it nonetheless must be declared as earnings. “Some individuals give their dealer a mandate to reinvest the dividends. They assume that since these are reinvested or aren’t repatriated, they don’t seem to be required to be reported. This is an error,” said Kakkar. Essentially, you will need to declare the dividend payout and also add it to the total shares value and declare those as equity shares in schedule FA.

    All the information required to fill in the ITR with respect to cost of acquisition, fair market value, peak value, sale price of stocks is available in the statement provided by your broker. “Information on dividend and the tax withheld is given in form 1042s that can be downloaded from the foreign brokerage account,” stated Mahajan.

    Do additionally notice that that is the primary yr that cryptocurrencies must be reported in ITR. Will cryptocurrencies which can be purchased, offered or held on a overseas alternate qualify as overseas belongings? While the IT legislation doesn’t outline this, Karan Batra, founder, charteredclub.com says it’s higher to declare these belongings in schedule FA together with reporting in Schedule VDA.

    Taxpayers must also notice that, within the case of overseas belongings, ITR varieties require disclosures of belongings held at any time throughout the earlier calendar yr. For occasion, whereas submitting ITR for the evaluation yr 2023-24, you’ll need to declare overseas belongings held from 1 January 2022 to 31 December 2022. This is as a result of most international locations comply with the calendar yr, in contrast to India the place the monetary yr begins from 1 April. So, even for those who purchased overseas shares in February 2022, it have to be declared in schedule FA despite the fact that it falls in FY22 as per India’s fiscal calendar. Stocks or every other belongings purchased between January and March this yr aren’t required to be declared throughout the present ITR submitting train.

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    Updated: 28 Jun 2023, 12:48 AM IST

  • Tax guidelines for setting off long-term capital loss from numerous debt funds

    I’ve made capital beneficial properties of about 19 lakhs by promoting numerous debt mutual funds which I held for greater than 3 years. Approximate capital beneficial properties after indexation is about 3+ lakhs. In one fund which is traded within the US, I’ve a capital loss after conserving it for greater than 5 years. Is it attainable to set off this capital loss towards the capital beneficial properties which I’ve made? And if that’s the case how is the loss calculated, is it with indexation or with out indexation?

    As per the earnings tax provision, a taxpayer is allowed to set off losses of the present yr beneath the earnings beneath the identical head in addition to towards sure different heads. Since the debt funds and the US funds have been offered after having been held for greater than three years, the beneficial properties and losses are handled as long-term. No distinction is made between capital property based mostly on the nation of investments in debt funds. The taxpayer is allowed to set off his long-term loss towards the long-term capital beneficial properties for a similar monetary yr and has to pay tax solely on the steadiness of long-term capital acquire. The investments which have develop into long-term are eligible for indexation advantages besides investments made in listed shares and equity-oriented schemes.

    So you possibly can set off the long-term loss in respect of US funds towards long-term capital beneficial properties in respect of different debt funds. In case the setting off ends in internet long-term capital loss for the yr the identical can’t be adjusted towards short-term capital beneficial properties for a similar monetary yr. The internet long-term capital loss for the yr additionally can’t be set off towards earnings from different sources of the identical yr and needs to be carried ahead for set off towards long-term capital beneficial properties in eight subsequent years.

    In respect of investments made, after 31 st March 2023, in mutual fund schemes with home fairness funding doesn’t exceed 35% the earnings are to be handled as short-term capital beneficial properties regardless of holding interval and might be taxed at your slab fee.

    Balwant Jain is a tax and funding knowledgeable and may be reached on [email protected] and @jainbalwant on his Twitter deal with.

     

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    Updated: 21 Jun 2023, 09:09 AM IST

  • Why you need to keep away from submitting tax returns earlier than 15 June

    The earnings tax division has opened its portal for people to file their taxes for the present evaluation yr (fiscal 2022-23) and the deadline to take action is 31 July. While it’s a great apply to file earnings tax returns”>earnings tax returns (ITRs) early, specialists have a warning for the early birds: your annual earnings assertion (AIS) could possibly be outdated.

     

    Data pertaining to tax deducted at supply (TDS) and the assertion of monetary transactions (SFT) normally attain the federal government on 31 May and take 15 or extra days to get up to date. SFT paperwork sure high-value transactions carried out in a selected monetary yr. These embody bank card funds, money deposits aside from that within the present account, time deposits, share buybacks, and so on., every aggregating to ₹10 lakh or extra.

    “We have seen that taxpayers who file their returns early typically discover a mismatch in transactions when the TDS information will get up to date on the backend. So, it might assist if you don’t file your ITR earlier than 15 June,” said Karan Batra, founder, Charteredclub.com. AIS displays the date till which your data is updated and it would do well to cross-check this data before filing the ITR. Apart from AIS, salaried individuals must wait for their employers to issue Form16 so that the information can be reconciled with Form 26AS and AIS.

    What to look for in AIS

    In the last three years, the IT department has made ITR filing”>ITR submitting complete by growing the scope of the knowledge to be reported within the tax return and introducing AIS. The latter accommodates info on nearly all of the monetary transactions in a fiscal yr and misreporting of any earnings or transaction included within the AIS will get you on the taxman’s radar. One should cross verify all of the incomes given in AIS with the TDS certificates, curiosity earnings certificates and Form 26AS and lift a question if there’s a mismatch in order to get it rectified.

    However, specialists say taxpayers can not blindly depend on AIS alone for reporting all incomes and transactions. For one, Futures and Options (F&O) and intra-day trades will not be reported in AIS, so you’ll have to manually verify for this information in statements offered by your dealer. Second, information on capital good points produced from shares is normally incorrectly reported within the AIS. “As per the T+2 settlement cycle, the share value that NSDL experiences is of the second day after the inventory is bought. However, the division is conscious of this discrepancy, so notices haven’t been despatched for this explicit mismatch,” stated Batra. Taxpayers should report the proper values and never these reported within the AIS. From 27 January, all devices have moved to the T+1 settlement cycle.

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    Auto-populated ITR kinds assist, however they don’t seem to be error-free both. “Sometimes, there are additions or deletions that must be made resulting from discrepancies in pre-filled info. Taxpayers can manually edit these,” said Maneet Pal Singh, partner, I.P. Pasricha & Co.

    Report crypto, NFT

    This is the first year when income from cryptocurrencies and other Virtual Digital Assets (VDA) have to be reported. A separate section titled Schedule VDA has been included in ITR forms, except ITR-1, to report such income. “Salaried taxpayers who opt for the simple Sahaj (ITR-1) form will have to opt for ITR-2 if they have transacted in cryptocurrencies in the previous financial year,” stated Prakash Hegde, a Bangalore-based CA.

    The 2022-23 Budget had proposed a flat 30% tax (cess and surcharge further) on crypto property. Taxpayers have to provide scrip-wise particulars of all eligible transactions underneath Schedule VDA. The particulars embody date of acquisition, date of switch and head underneath which earnings is to be taxed.

    “Under the Income Tax Act, there are 5 heads of earnings: wage, home property, PGBP (Profits and Gains from Business or Profession), capital good points and earnings from different sources. In respect of VDAs, it may be taxable as enterprise earnings if the assessee is treating VDA as inventory in commerce. If these are handled as investments by the assessee, earnings from it may be taxed as capital good points,” said Singh.

    Even cryptocurrencies that are received as gifts have to be reported in the ITR. Taxation rules on gifts apply to cryptocurrencies also. However, gifts from parents and siblings are exempt from tax irrespective of the value.

    Form for new regime

    Those opting for the new tax regime have to fill and submit form 10IE along with their ITR. “Business professionals are allowed to switch between the old and the new tax regimes only once, unlike salaried individuals who are not subject to such restrictions. Through this form, the IT department can easily track this activity,” stated Nitesh Buddhadev, founder, Nimit Consultancy.

    Take observe that salaried people who file ITR in type 3 due to F&O or to report freelance earnings, if any, will probably be handled as enterprise professionals and will probably be eligible to modify between the 2 tax regimes solely as soon as.

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    Updated: 14 Jun 2023, 09:17 AM IST

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  • How NRIs are taxed on property sale constructive features

    I’m an NRI having a flat in Pune, which I want to advertise. My father has the ultimate vitality of lawyer. What is the method I should adjust to? What about income tax on capital purchase? In which account the cheque should be deposited–NRI/NRO/monetary financial savings account?

    — Name withheld on request

    Gains on the sale of a flat shall be taxable in your fingers and you need to file an income tax return in India to report them. The sale proceeds paid to you shall be subject to TDS. 20% TDS is likely to be deducted if the property has been held for larger than 2 years; in another case the pace of TDS is 30%. You can declare this TDS by submitting an income tax return. In case you plan to reinvest the constructive features, you could possibly obtain a low/nil TDS certificates and supplies it to the shopper so that TDS is deducted as required.

    Taxation for capital constructive features for NRIs and residents is nearly an equivalent aside from the TDS as talked about above. You can deposit the sale proceeds in your NRO account.

    In case of the proprietor being an NRI, it’s the tenant’s accountability to deduct TDS on lease and deposit it with the income tax division. Otherwise, there’s provision for penalty. But what if the proprietor/house proprietor’s NRI standing is hidden from the tenant and subsequently tenant has not deducted any TDS on lease, nonetheless landlord himself has deposited TDS as advance tax; what shall be the punishment for tenant along with NRI landlord?

    — Dolly Moga

    The onus of deducting and depositing the TDS shall rest on the tenant. The tenant might obtain a certificates that specifies the residential standing of the proprietor. The tax need to be deducted from the lease payable on the cost of 31.2%. This tax cost is related besides the NRI landlord has a certificates stating that his entire income from India is below the exemption limit. If you fail to deduct tax from the lease paid to an NRI landlord, you could possibly enchantment to a penalty equal to the tax not deducted as per Section 271C of the Income Tax Act. There are excessive penalties for not depositing the TDS deducted. Even though the NRI might have deposited advance tax, the tenant ought to deduct TDS from the lease paid.

    Archit Gupta is founder and CEO at Clear.in.

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    Updated: 29 May 2023, 10:58 PM IST