Saturday, July 1, 2023

Income Tax Return E Filing for Asst Year 2023-24 Made Easy –Part 5

 Capital Gains

Treatment of Profit from Sale of Listed Shares

·         The CBDT has provided guidelines through Circular No. 6/2016 regarding the taxation of surplus generated from the sale of listed shares or securities.

·         If the taxpayer treats the shares as stock-in-trade, the income from their transfer will be considered as business income, regardless of the holding period.

·         If the taxpayer wants to treat the income as capital gains for listed shares held for more than 12 months, the Assessing Officer should not dispute it. However, this treatment should remain consistent in subsequent assessment years.

·         These guidelines aim to reduce litigation and maintain consistency in the treatment of income from share and securities transfers.

      Treatment of Profit from Intra-Day Trading

·         Intra-day trading is considered speculative business, and the resulting gain or loss is treated as speculative gain or loss.

·         Speculative gains are taxed at normal rates, and speculative losses can only be set off against speculative profits.

Tax Calculation for Long-Term Capital Gains with Section 112A and Section 80C Deduction

·         If you have long-term capital gains taxable at 10% under Section 112A and have made an eligible investment of Rs. 1 lakh for Section 80C deductions, the tax calculation is as follows:

a.       Total income (long-term capital gains in excess of Rs. 1,00,000): Rs. 9,00,000

b.       Less: maximum amount not chargeable to tax: Rs. 2,50,000

c.       Gross total income: Rs. 6,50,000

d.       Tax rate under Section 112A: 10%

e.       Tax payable (after cess): Rs. 67,600


Details of Capital Gains in ITR for Transferred Shares

·         For Assessment Year 2020-21, the CBDT clarified that scrip-wise details are required for shares or units eligible for grandfathering.

·         Grandfathering allows exemption for gains made on listed shares/specified units up to 31-01-2018.

·         For AY 2023-24, it is inferred that scrip-wise details are not required for gains not eligible for grandfathering.

        Reporting Property and Buyer Information for Capital Gains on Foreign Property

·         Schedule CG of ITR requires the taxpayer to provide details of transferred immovable properties, regardless of whether they are in India or abroad.

·         The schedule asks for the buyer's information, such as their name, PAN/Aadhar No., address of the property, date of purchase and sale, country, and zip code.

·         Quoting the PAN of the buyer is mandatory only if tax is deducted under section 194-IA or mentioned in the sale documents.

Tax Payment, TDS, TCS, and Refund

Claiming Tax Deducted in Advance on Subsequent Year's Income

·         Certain TDS provisions require tax deduction at source when making payments or crediting income, including advance payments.

·         The ITR forms have columns to fill in information about tax deducted in previous years, but the credit for such tax can only be claimed in the future year.

·         You cannot claim the credit of TDS for income that is taxable in the subsequent year.

·         The TDS credit can be carried forward to the subsequent year and claimed when the income is offered for taxation.

Correcting Bank Account Number for Tax Refund

·         If your income tax refund failed due to an incorrect bank account number, you can submit the correct bank account details for refund re-issue.

·         Follow these steps to apply for refund re-issue:

a.       Log in to

b.       Go to 'Services' and select 'Refund Re-issue'.

c.       Choose 'Create Refund Re-Issue Request'.

d.       Select the record for which you want to submit the request.

e.       Provide the bank account where you want to receive the refund.

f.        Click on the 'Proceed to Verification' button.

Dealing with TDS Mismatch

·         There are cases where the credit for TDS claimed in the return matches the balance in Form 26AS, but the Assessing Officer still raises a demand for the differential TDS amount.

·         The CBDT has identified common mistakes leading to tax credit mismatches, such as incorrect TAN of the deductor, filing information in wrong TDS schedules, or including tax deducted by one deductor in the amount deducted by another.

·         Taxpayers are advised to verify if the demand is due to such tax credit mismatches and submit rectification requests with correct TDS/tax claims to correct these demands.

·         Rectification requests should be submitted to the jurisdictional Assessing Officer or through the e-filing portal based on the processing authority.

·         If the TDS mismatch is due to an error in the TDS return filed by the deductor, the deductor should rectify the TDS return.

Claiming TDS Credit in ITR when Deductor Didn't Deposit TDS

·         If a deductor fails to deposit TDS, the taxpayer should request the deductor to deposit the TDS with the government and file a TDS statement. However, the taxpayer cannot legally enforce the deductor to do so.

·         In such cases, the taxpayer can submit TDS proof to the tax department.

·         The ITR forms do not allow attachment of supporting documents for the TDS claim. It is advisable to file the ITR, claim TDS credit, and wait for the processing.

·         If a notice of TDS mismatch is received, the taxpayer can file a reply and submit supporting documents, such as salary slips and bank statements showing net salary/other income after TDS deduction.

·         The Assessing Officer may allow TDS credit and cancel the demand raised by the CPC if the documents are correct. If not, the taxpayer can approach the court.

·         Section 205 of the Income Tax Act prevents direct demand against the taxpayer if tax has been deducted at source, providing relief to the taxpayer in case of a tax credit mismatch.

Avoiding Deduction of Tax on Interest Income (Form 15H and Form 15G)

·         If you are a senior citizen and have a bank fixed deposit, you can file a self-declaration to the bank in Form 15H to avoid the deduction of tax on interest income.


·         If you are not a senior citizen, you can file a self-declaration in Form 15G for the same purpose.

Avoiding Tax Deduction on Interest Income from Saving Deposits

·         If you earn interest income of Rs. 40,000 or more from saving deposits, tax will be deducted from the interest payable on time deposits exceeding this threshold.


·         However, any interest payable in respect of saving deposits will not attract any TDS.

Dealing with Outstanding Tax Demand

·         If your income tax return has been processed, and it shows an "Outstanding Tax Demand," you can respond to it online through the e-filing website.


·         Here are the steps to follow:

a.       Log in to the e-filing portal.

b.       Click on "Pending Actions" and then select "Response to Outstanding Demand" to see the list of outstanding demands.

c.       If you want to pay the demand, click "Pay Now" to make the payment.

d.       On the "Response to Outstanding Amount" page, click "Submit Response" to provide a response to the outstanding demand.

e.       Depending on the scenario, you can choose the relevant section:

                                             I.            If the demand is correct, but you haven't paid the tax, you can confirm that the demand is correct and proceed to make the tax payment.

                                           II.            If the demand is correct, and you have already paid the tax, you can add the details of the challan to provide proof of payment.

                                         III.            If you disagree with the demand (in full or part), you can add reasons for disagreement and submit the response.

a.       After submission, you will receive a Transaction ID for future reference.

Adjusting Tax Refund against Pending Tax Demand

·         The Central Board of Direct Taxes (CBDT) has empowered the Centralized Processing Centre (CPC) to adjust tax refunds against pending tax demands.


·         If there is a tax demand against an individual for a particular assessment year, the refund claimed by that individual for the next assessment year can be adjusted against the pending tax demand.

Late Filing Fee for Income Tax Return

·         A late filing fee under Section 234F is levied if the taxpayer does not file the income tax return by the due dates specified in Section 139(1).


·         The late filing fee is Rs. 5,000 if the return is furnished after the due date specified under Section 139(1). However, if the total income of the person does not exceed Rs. 5 lakhs, the late filing fee is Rs. 1,000.


·         The late filing fee does not apply to taxpayers where return filing is not mandatory, and the taxpayer voluntarily files the return of income.

Getting Tax Refund in Foreign Bank Account for Non-Residents

·         Non-resident taxpayers filing an income tax return in India can receive their tax refunds in their foreign bank accounts.


·         Non-residents need to provide the SWIFT code of their foreign bank account, the name of the bank, and the International Bank Account Number (IBAN) in the ITR form.

Claiming Relief under Section 89 (Form 10E)

·         If you are a government employee and have received arrears of salary based on the recommendations of the 7th Pay Commission, you need to file Form 10E online on the e-filing website to claim relief under Section 89.


·         Filing Form 10E is mandatory. If you claim relief under Section 89 without filing Form 10E, you will receive a notice from the Income-tax Department stating that the relief has not been allowed because the online form was not filed.

   Make sure to file Form 10E online before filing your income tax return. If your employer fails to provide relief under Section 89 and deducts excess tax, you can claim that relief in your return of income and seek a refund of the excess tax deducted. Again, filing Form 10E online is mandatory in this case as well.