Personal Finance

Your Taxes

Sudhakar Sethuraman | Updated on January 05, 2020 Published on January 05, 2020

My total income from all sources this financial year would be around ₹3.50 lakh, which includes ₹1.10 lakh of long-term capital gains, which I have already earned. I would like to invest around ₹1 lakh under Section 80 C for tax-saving purposes. Though I may not be eligible for tax on the total amount, should I still pay capital gains tax?

Alphonso Sequeira

As per Section 112 of the Income Tax Act, long- term capital gains (LTCG) are taxable at the rate of 20 per cent, plus applicable surcharge and cess. However, LTCG in excess of ₹1 lakh from sale of equity shares or equity-oriented mutual funds subject to security transaction tax, are taxable at a concessional rate of 10 per cent, plus applicable surcharge and cess, under Section 112A. It may be noted that no deduction is allowable under Section 80C on these income.

If taxable income of a resident individual excluding income from capital gains is less than the basic exemption limit of ₹2.5 lakh, relief can be claimed to the extent of difference between the basic income exemption limit and the net taxable income excluding capital gains. Thereby, taxable LTCG shall be reduced to that extent. To illustrate:

I worked for a small product company in Hyderabad for four years from 2015 to March 2019. My ex-employer has deposited only a partial TDS for FY18-19, as per 26AS, in the e-filing website. Despite repeated communication, they are not providing my Form 16 for FY18-19. The accounts department says it has a financial crunch and will give it soon. I filed a grievance on the Income Tax department e-filing portal in August 2019, but they asked me to contact the TDS office. Should I contact them? What grievance mechanism do I have? Should I file ITR with a late fee, with the salary details I have in terms of payslips, or should I wait till they give Form 16 or deposit complete TDS for salary paid?

Gopi K

Section 192 of the Income Tax Act imposes obligation on the employer to withhold and deposit taxes to the government, within prescribed timelines. Also, Section 203 requires the employer to issue the salary certificate in Form 16 and Form 12BA, specifying the salary amount, taxes withheld, etc. Failure to comply with this attracts interest and penal implications for the employer. Section 205 protects the taxpayer from payment of any tax if it has already been deducted.

Tax return for FY2018-19 can be filed on or before March 31, 2020, with a late fee. You could rely on Office Memorandums issued by the Central Board of Direct Taxes (CBDT), advising the tax officers not to recover the tax amount from taxpayers, if the deductor has already withheld taxes and failed to deposit it into the government treasury.

Also, as per Bombay High Court’s decision in case of Yashpal Sahni (2007 TMI 1646), it was held that tax authorities cannot recover the taxes once again from the taxpayer who has suffered the deduction. Once you file the tax return, you might receive a notice from the tax authorities for mismatch in tax details. You may have to then explain the situation in detail to the tax authorities, together with pay-slips and other supporting documents. Further, a grievance petition can be filed via the e-filing portal under the tab resolution sought from ‘Centralised Processing Centre for TDS return (CPC-TDS)’.

The writer is Partner, Deloitte India.

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Published on January 05, 2020
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