TAX TALK-14.09.2015-THE HITAVADA
TAX TALK
CA. NARESH JAKHOTIA
Chartered Accountant
Scratch cards & Lottery schemes are subject to Tax Deduction at Source
Query 1]
This query is with respect to double deduction of TDS & WCT and reversal of
one in next financial year. The facts of the case are as per below:-
In the FY 2014-15, an Invoice punched twice in ERP Accounting system, resulted to double deduction of TDS & WCT. The amount of TDS & WCT may be assumed Rs. 5000/- & 1000/- respectively. Due to some technical errors in ERP Accounting Software, the entry which is punched double could not be reversed in FY 2014-15 and had to be reversed in next FY i.e., 2015-16. Now, the party, for the FY 2014-15 has got the TDS certificate with double amount of TDS deducted i.e. Rs.10000/- & Rs. 2000/- for WCT. Now, please let me know through your column the remedy for the double deduction of TDS & WCT in a financial year and its subsequent reversal in next financial year.
[Vikesh Satpute- vikeshsatpute@gmail.com]
Opinion:
There is an option to rectify the mistake in the TDS return by filing correction statement. In the Correction statement of TDS, quote the amount of TDS and amount of invoice only once as against the accounting entry wrongly punched twice in the books of accounts. Same way, revision is possible for WCT return.
Query 2]
I am working in private sector. My wife is working as a lecturer in a private college. My father is a retired person aged over 78 years having no PAN card. I have following two queries, kindly guide:
1. We have availed a housing loan in the joint name of three of us from UCO Bank to construct house on the plot which is in name of my father which he inherits. As my father is not availing the benefit of Housing loan interest, can I or my wife avail the same as the repayment of loan is being done by me and my wife? If not, is there any way out to that?
2. If my wife is not availing the benefits of LIC, PF, Tuition fees etc, in her return, can I claim the same in my return? [Sacchit Bakhle-sacchitb@yahoo.com]
Opinion:
The first part of the question is a very unique & often asked by the taxpayers on various occasion. Taxpayer need to understand that ownership in a house property is one of the first & foremost vital pre-condition for being eligible to claim deduction towards housing loan interest & principal repayment. Without ownership in the house property, no right would emanate for deduction. The second pre-condition is the availment of loan towards the house property. In case of joint ownership, deduction is available on the basis of ratio in the loan.
In your case, land is owned by your father wherein construction is proposed by you & your wife. It is very much possible in a family that a land is owned by one person & the structure/ construction by another. From your query, it appears that both of you propose to construct the house property by availing housing loan wherein your father would be joining as an applicant, as without his involvement in the loan documentation, property could not be mortgaged and loan could not be availed. In short, your father would be joining in the loan documentations for the sake of legal requirements only. In my opinion, the deduction eligibility would not be hampered by mere fact that some other person (father, in your case) has also joined in the loan documentations. The house structure on plot belongs to you and your wife & both of you (Husband & wife) can claim deduction towards payment of interest & principal of housing loan u/s 24(b) & u/s 80C respectively.
The option to claim entire deduction by one person towards payment of LIC/PPF & Tuition fees for the mere reason that spouse is not claiming it, is not an open choice with the taxpayer. The husband or wife, whosever makes the payments, would be eligible for deduction. In short, tax planning for availing tax benefit has to be done at the time of payment itself. At a later date, tax planning scope is restrictive and taxpayers have to claim the benefit of deduction on the basis of payment done. The claim has to be compulsorily backed by documentary evidences so as to justify its deduction claim.
Query 3]
While purchasing a car, I got a scratch card scheme from the seller for Gold Coin. On scratching the card, we allotted the 5gm Gold Coin worth Rs. 14,000/- (Fourteen Thousand approx). This car purchase transaction is done in March-2015, means last accounting year. Now, after repeated follow-up for the gold coin, the Car seller is asking for Gift Tax? Please let me know whether the Gift Tax is applicable in this case? If so, at what rate? The accounting year of the transaction is FY 2014- 2015. [Manoj V. Bhagwat -vinson_pneumatics@yahoo.co.in]
Opinion:
- Gift tax has been abolished long back. There is no gift tax payable now.
- From your query, it appears that you have won a gold coin in a scratch card scheme at the time of purchasing a car. Lottery schemes /scratch cards schemes are often used as a powerful sales promotion tool & are very much in vogue since long. There are many people who are not aware of the fact that winning amount is subject to income tax levy. The amount of winning is subject to tax deduction at source (TDS) if the prize money exceeds Rs. 10,000/-. Probably, the car seller is asking for the TDS amount as the prize money is payable to you is in kind and not in cash. The TDS rate is 30% for the FY 2014-15 if the receiver is a resident taxpayer.
- At the time of filing your income tax return, the winner of prize money is advised to show the amount as “Income from other Source” & also to show the amount of TDS in the return forms.
[The author is a practicing Chartered Accountant from Nagpur.
Readers may send their direct tax related queries at
SSRPN & Co
10, Laxmi Vyankatesh Apartment
C.A. Road, Telephone Exch. Square
Nagpur-440008
or email it at
nareshjakhotia@ssrpn.com]
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