Tax Column

Tax Column

I am an individual. For the financial year 2020-21, TDS has been deducted on my rental and interest income. I have also made certain payments which are eligible for deduction under Section 80 C. Due to oversight I have also paid advance tax. However, when I computed my income, I found that substantial refund is due to me because of excess TDS deduction and advance tax. Kindly let me know how to get the refund and also whether I will get any interest on excess tax? Also, how much time does it take to get the refund?

Under Section 237 of the Income Tax Act, if any person claims that he has paid tax which exceeds the amount that he is chargeable, he is entitled to refund of excess taxes paid. In your case, if you satisfy the assessing officer that the amount of tax paid exceeds the amount which is payable on the chargeable income, you will certainly get a refund of the excess amount. For making a claim of refund, you have to furnish the Income Tax Return for the assessment year 2021-22 in accordance with the provisions of Section 139 of the Income Tax Act. In the return you must claim refund which is duly supported by tax credit reflected against you in 26 AS which you can download from the Income Tax portal.

The Income Tax Department will process your return through CPC and if found correct, refund would be granted to you. Under Section 244 A, you will also be entitled to simple interest at the rate of 0.5 per cent for every month on the amount of refund from April 1, 2021 till the date on which the refund is granted. For example, if the refund is granted in January 2022, then interest will be paid from April 1, 2021 till January 31, 2022.

These days the Income Tax Department processes the returns, particularly of individuals, within a period of 3-4 months from the date of filing. Therefore, you should file the return immediately and hopefully you may get the refund before March 31, 2022. I am a lady and own gold and diamond jewellery which was acquired almost 30 years back. In the past I have filed my Wealth Tax Return disclosing details of the jewellery. I desire to sell some old jewellery in the current financial year for an approximate sale consideration of Rs 2 crore. Will I be liable to pay any Income Tax thereon since the jewellery is my personal asset and used exclusively by me? If taxes are payable, how do I compute and what is the rate of taxation?

Under Section 2(14) of the Income Tax Act, which defines personal effects, jewellery is excluded. Therefore, jewellery is a capital asset and any surplus on sale of jewellery is subject to Capital Gain Tax. Accordingly, the entire sale consideration of jewellery is subject to this tax. Since the jewellery has been owned by you prior to April 1, 2001, the fair market value of jewellery as on April 1, 2001 becomes your deemed cost. Further, since the jewellery is a long-term capital asset in your hand, you are also entitled for indexation of the deemed cost. The actual sale consideration less indexed cost would be the net capital gain in your hand which is chargeable at 20+ per cent surcharge. Kindly maintain all the documents such as sale invoice, fair market valuation report as on April 1, 2001 and old wealth tax records to establish ownership of jewellery, etc. as these may be called for during the assessment.

I am an individual and an Indian citizen. I have been a non-resident for the last 25 years. Therefore, my salary income received aboard was never offered for taxation in India in my tax returns which I filed in India. After my retirement I will receive pension from my foreign employer for my remaining life. Would that be taxable in India if I settle here?

If you remain outside India and receive your pension it would not be taxable in India since you are a non-resident and also because the income has accrued to you outside India. If you decide to become a resident in India, then your foreign income i.e. pension from your former foreign employer would be subject to taxation in India.

In the financial year 2020-21, I have earned dividend income, interest income and rental income. The aggregate of this income is approximately Rs30 lakhs. I have incurred capital loss both short-term and long-term of almost Rs20 lakhs in the same financial year. Is the capital loss available for set-off against my other income?

Under Section 74 of the Income Tax Act, capital loss is not available for set-off against income under any head even if it relates to the same accounting year. Therefore, in your case, you will not get any set-off and you will have to pay tax on Rs30 lakhs. However, you will be entitled to certain deduction available under the IT Act. Moreover, you will be entitled to carry forward the capital losses to be set off against the subsequent year’s capital gain. Further, long-term capital loss is eligible to be set off even subsequently only against long-term capital gain To avail carry forward of capital loss you have to file return of income within the due date specified under Section 139 of the IT Act. If there is a delay in filing the return, you will lose claim of carry forward of capital losses. 

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