sTAX TALK-14.08.2017-THE HITAVADA
CA. NARESH JAKHOTIA
Section 80TTA provides for deduction of interest on deposits in saving account up to a maximum of Rs. 10,000/- only. Interest received over & above Rs. 10,000/- is taxable.
Interest on Saving Bank account up to Rs. 10,000/- is eligible for deduction u/s 80TTA
- During payment of income tax by challan on 29th March 2017, state bank asked me to change year A.Y. 2016-17 (instead of A.Y. 2017-18 written correctly). Now, I am not getting details of challan in AY 2017-18 while filling IT return. They are in AY 2016-17. What should I do for correction? Please clarify.
- Also in case of my friend, office said to pay income tax in the name of his TAN (Office TAN No) to avoid penalty to them for short deduction. Is it correct process? Please clarify. [A.Maheshwar- firstname.lastname@example.org]
- Taxpayer need to be careful & should ensure that there is no error in the tax challan while making the payment as error in quoting PAN, in the head of tax payment like advance tax, Self assessment tax, tax on regular assessment, Assessment Year, tax applicable (Income tax other than companies) etc results in denial of credit of such payment. All the data should be carefully recorded so as to get the credit in the income tax return.
In your case, there was a mistake in quoting the assessment year at the time of making the payment. The correction is required to be carried out by approaching the concerned assessing officer. You can write a letter to your assessing officer pointing out the error with a request to suitably amend the challan. Taxpayer may check the jurisdictional assessing officer by logging at the income-tax portal at www.incometaxindia.gov.in.
[Even few taxpayers are receiving the demand notices due to error in wrong quoting of challan number (CIN) while filing income tax return. In such cases, taxpayer need not approach the assessing officer. They can rectify the mistakes online by logging at the income tax website in the menu “My Account”].
- Payment under TAN (Tax deduction account number) needs to be done by the employer / payer & not payee. Further, credit will not be available if the detail of payment is not incorporated in the TDS return which is required to be filed by the deductor /payer within a specified time period.
I am earning Rs. 10,000/- annual from interest of saving Account.
- Am I eligible for benefit of rebate in Section 80TTA of IT Act?
- How above rebate can be claimed in ITR?
- If annual interest from saving Account is more than Rs 10,000/-, What will be impact in filling of ITR? [S.K.Sahu, Korba (CG)- email@example.com]
- Interest on saving bank is taxable under the Income Tax Act-1961. However, section 80TTA provides for deduction of interest on deposits in saving account with Banks, credit societies & post office, up to a maximum of Rs. 10,000/-. For example, if your interest on SB A/c is Rs. 11,000/- then at the first instance Rs. 11,000/- would be added to your income under the head “Income from other sources” and thereafter Rs. 10,000/- deduction is required to be claimed in section 80TTA under chapter VI-A.
- In case of joint saving bank accounts, interest would be taxable in the hands of the beneficial account holder. As a tax management measures in such cases & in view of increasing compliance burden of reporting all accounts in the ITR forms, taxpayers may now consider opting for individual account instead of joint accounts.
- The deduction can be claimed by mentioning the amount in 3rd clause u/s 80TTA in “Schedule VIA”.
Please guide me in the following matters:
2. I have to sell my flat (which was purchased before 10 years) to purchase new Bungalow. The flat was purchased in Rs. 5 lakh, its sale price is Rs. 20 lakh. The price of New Bungalow to be purchased is Rs. 50 lakh. Rs. 45 lakh will be bank loan & margin of Rs. 5 lakh will be managed by funds received on sale of flat. Please guide me whether the amount received by sale of flat is taxable?
- Whether the amount of leave encashment payable to widow of a deceased employee is taxable?
- Please narrate the provisions under Capital Gain Scheme in brief. [Ravi Bagade- - firstname.lastname@example.org]
b] Exemption u/s 54EC:
- Amount paid to the legal heir of the deceased employee towards privilege leave standing to the credit of such employee at the time of his/her death is not at all taxable as salary in view of the Circular No. F.35/1/65-IT(B) Dated 05/11/1965. Similarly, sum equivalent to leave salary received by the family members of Government servant who dies in harness is also not taxable in the hands of the recipient in view of Circular No. 309 Dated 03/07/1981.
- In your case, you have purchased a flat for Rs. 5 Lakh and selling it for Rs. 20 Lakh. You are eligible for indexation benefit from the year of acquisition to the year of sale. As a result, your cost of Rs. 5 Lakh would be replaced by higher value so as to calculate LTCG. Your sale consideration is Rs. 20 Lakh. However, if the value adopted by the Registrar of stamp duty is higher than Rs. 20 Lakh, then such higher consideration would be required to be taken as sale consideration for computing LTCG. The amount of sale consideration over and above indexed cost of acquisition would be the amount of LTCG liable for income tax. It is taxable @ 20% u/s 112.
- Taxpayers have an option to save tax by opting an exemption u/s 54 or U/s 54EC, as under:
a] Exemption u/s 54:
For exemption u/s 54, taxpayer have to invest the amount of LTCG in purchase or construction of one residential house property within a prescribed time period. I. The prescribed time periods are as under:
i] For purchase:
One year before or two years after the date of transfer.
ii] For Constructions:
Three years after the date of transfer.
For exemption u/s 54EC, taxpayer have to invest the amount of LTCG within a period of 6 months from the date of transfer in a specified bonds issued by NHAI / REC. These capital gain tax saving bonds have a lock-in-period of 3 years.
- In your specific case, you intend to purchase the house property within a stipulated period. As a result, you can claim an exemption u/s 54 against LTCG arising on sale of your old flat. You should ensure the purchase of the property before the due date of filing income tax return of the relevant year or else you should invest the amount in CGDAS during the interim period.
[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
or email it at email@example.com.]