TAX TALK-09.01.2012-THE HITAVADA
TAX TALK-09.01.2012-THE HITAVADA
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“CORRECTION IN INCOME TAX CHALLAN”
Query 1]
I had deposited Advance Tax on 10/06/2009 of Rs. 3,000/- in a Nationalized Bank at Pune. I had written my name and PAN correctly. I received the counterfoil & submitted the same with my IT Return for A.Y. 2010-11 along with other tax payments counterfoils. Recently I received Tax Refund and observed that it is lesser by Rs. 3,000/- than actually claimed refund.
On taking up the matter with the concerned Ward office, I was told that the credit is not appearing in my A/c for the said Rs. 3,000/- deposited by me on 10.06.2009. I took up the matter with Bank who issued me a computer Generated Receipt (In Annexure A-IV-II). I observed that Bank has entered wrong PAN No. while remitting funds to Govt. though counterfoil of IT challan shows correct PAN. The name mentioned is correct. I request you to please guide me as to take steps for refund of Rs. 3,000/- [Arvind Deshpande-arvisneha2000@gmail.com]
Opinion:
There are numerous instances where there is an error while making payment of Tax either electronically or manually. To rectify these errors, Income-Tax Department has issued new guidelines effective 01-09-2011. This new mechanism allows Banks to correct physical challans only. For correction in electronic challan, request will have to be made to the concerned Assessing Officer. For general benefit, the procedure for correction is physical challan is given hereunder:
Fields that can be corrected by bank:
· Assessment Year
· Major Head Code
· Minor Head Code
· TAN/PAN
· Total Amount
· Nature of payment (TDS Codes)
Time frame for correction request:
- Request for correction has to be made within 7 days of deposit of challan for correction in PAN, TAN and Assessment Year
- For Major head, minor head and nature of payment, request can be made within 3 months of deposit of challan.
Remedy available after time frame is over:
- After lapse of time frame, request can be made to the Assessing Officer.
Time frame given to bank to carry out correction:
- After receipt of request, bank must carry out the correction within 7 days.
Other conditions for correction:
- Correction in name is not allowed
- Any combination of correction of Minor Head and Assessment Year together is not allowed
- PAN/TAN correction will be allowed only when the name in the challanmatches with the name as per the new PAN/TAN.
- The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.
- For a single challan, correction is allowed only once. However, where 1st correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields.
- There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.
Procedure for requesting correction:
- The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.
- The tax-payer has to attach copy of original challan counterfoil.
- In case of correction desired for challan in Form 280, 282, 283, the copy of PAN card is required to be attached.
- In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.
- A separate request form is to be submitted for each challan.
Correction in Electronic Challans
- For correction in electronic challans and for correction after the time period for application to bank lapses, a written request in prescribed format has to be made to the Assessing Officer
- Assessing Officer has power to rectify the error , in bona fide cases, to enable credit of tax to assessee
Form of application to bank:
Income-tax department has given a format in which application can be made to the bank.
The form is given is available at nareshjakhotia.blogspot.com or
http://www.incometaxindia.gov.in/archive/LeftMenu_ChallanCorrectionMechanism_26
82011.pdf
In your specific case, you have to make an application to your Assessing Officer elaborating the facts of the case along with all the relevant documents to prove the payment. You may further obtain the letter from the bank admitting the mistake caused at their end, which may also be submitted to the A.O. to carry out the necessary changes.
Query 2]
An ancestral House-property, Situated in M.P., was transferred to me, being the eldest, as per the family-partition in the year 2007-08. This property was originally purchased by my two paternal- uncles jointly, in the year 1968-69 for Rs. 18,000/- only (Rs. Eighteen Thousand only), as a family-property, which was transferred to my father in the year 2004-05 according to their family-partitions. I now wish to sell-off this property for Rs. 9.25/-Lacs (Rs Nine Lacs twenty five Thousands only) in this current year 2011-12. I shall be distributing/gifting this amount equally to my three younger brothers & sisters, being the family property.
My queries are:
1. Under the above circumstances, what shall be my quantum of LTCG or any other tax, if any?
2. How much amount I shall be required to invest in the infra-structural Bonds (NHAI etc) or in another house property to minimize or nullify LTCG?
I also wish to point-out here one interesting but may or may not so relevant fact that the original seller who had sold property to my uncles in 1968-69 had also obtained the same in his family-partitions at that time. Please enlighten in the matter. [dilipgpawar@rediffmail.com]
Opinion:
1. From the amount of sale consideration, the expenses incurred in connection with transfer (like brokerage etc) could be reduced to arrive at the figure of Net Sale Consideration. [The sale consideration in your case is Rs. 9.25 Lacs. However, if the value adopted by the Stamp duty authorities is higher than Rs. 9.25 Lacs, then such higher value would be deemed as sale consideration for computing capital gain]
2. The difference between thea) Net sale consideration & b) the fair market value of the property as on 01.04.1981 & indexed cost of improvementwould be treated as “Long term capital gain”
3. The Long term capital gain is taxable @ 20% u/s 112 of the Income Tax Act-1961.
4. In the absence of all the relevant information like fair market value as on 01.04.1981, cost/year of improvement etc the amount of long term capital gain could not be worked out.
5. The first incidence of tax would arise in your hands only. Subsequent gifting of the amount amongst brothers & sister would not enable you to reduce your tax bill.
6. One can save the Long Term Capital Gain tax arising from sale of plot by following mode: a) U/s 54EC:To save LTCG tax u/s 54EC, you are required to invest the amount of Long Term Capital Gain (LTCG) within a period of 6 months from the date of sale/transfer of assets in the specified bonds issued by REC/NHAI.b) U/s 54F: For exemption u/s 54F, subject to various other terms / stipulations, you have to invest the amount of net sale consideration for purchase of a residential house property within a prescribed period.
7. The property to be sold is an ancestral property. You may examine the possibility of treating the property / income as belonging to the HUF.
8. All our readers may please note that the new Direct Tax Code has proposed to replace the base date in respect of old properties from existing 01.04.1981 to 01.04.2000 for computation of capital gain. If it happens so, it would be beneficial to transfer the ancestral/old property after the new DTC regime come in force. However, dust on the DTC has not yet been cleared & the final provisions & the date of its enactment, etc are still not very clear. We will try to cover the tax planning aspects in the new Direct Tax Code vis a vis Income Tax Act after the Government releases the final code & announces its date of enactment.
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“CORRECTION IN INCOME TAX CHALLAN”
Query 1]
I had deposited Advance Tax on 10/06/2009 of Rs. 3,000/- in a Nationalized Bank at Pune. I had written my name and PAN correctly. I received the counterfoil & submitted the same with my IT Return for A.Y. 2010-11 along with other tax payments counterfoils. Recently I received Tax Refund and observed that it is lesser by Rs. 3,000/- than actually claimed refund.
On taking up the matter with the concerned Ward office, I was told that the credit is not appearing in my A/c for the said Rs. 3,000/- deposited by me on 10.06.2009. I took up the matter with Bank who issued me a computer Generated Receipt (In Annexure A-IV-II). I observed that Bank has entered wrong PAN No. while remitting funds to Govt. though counterfoil of IT challan shows correct PAN. The name mentioned is correct. I request you to please guide me as to take steps for refund of Rs. 3,000/- [Arvind Deshpande-arvisneha2000@gmail.com]
Opinion:
There are numerous instances where there is an error while making payment of Tax either electronically or manually. To rectify these errors, Income-Tax Department has issued new guidelines effective 01-09-2011. This new mechanism allows Banks to correct physical challans only. For correction in electronic challan, request will have to be made to the concerned Assessing Officer. For general benefit, the procedure for correction is physical challan is given hereunder:
Fields that can be corrected by bank:
· Assessment Year
· Major Head Code
· Minor Head Code
· TAN/PAN
· Total Amount
· Nature of payment (TDS Codes)
Time frame for correction request:
- Request for correction has to be made within 7 days of deposit of challan for correction in PAN, TAN and Assessment Year
- For Major head, minor head and nature of payment, request can be made within 3 months of deposit of challan.
Remedy available after time frame is over:
- After lapse of time frame, request can be made to the Assessing Officer.
Time frame given to bank to carry out correction:
- After receipt of request, bank must carry out the correction within 7 days.
Other conditions for correction:
- Correction in name is not allowed
- Any combination of correction of Minor Head and Assessment Year together is not allowed
- PAN/TAN correction will be allowed only when the name in the challanmatches with the name as per the new PAN/TAN.
- The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.
- For a single challan, correction is allowed only once. However, where 1st correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields.
- There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.
Procedure for requesting correction:
- The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.
- The tax-payer has to attach copy of original challan counterfoil.
- In case of correction desired for challan in Form 280, 282, 283, the copy of PAN card is required to be attached.
- In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.
- A separate request form is to be submitted for each challan.
Correction in Electronic Challans
- For correction in electronic challans and for correction after the time period for application to bank lapses, a written request in prescribed format has to be made to the Assessing Officer
- Assessing Officer has power to rectify the error , in bona fide cases, to enable credit of tax to assessee
Form of application to bank:
Income-tax department has given a format in which application can be made to the bank.
The form is given is available at nareshjakhotia.blogspot.com or
http://www.incometaxindia.gov.in/archive/LeftMenu_ChallanCorrectionMechanism_26
82011.pdf
In your specific case, you have to make an application to your Assessing Officer elaborating the facts of the case along with all the relevant documents to prove the payment. You may further obtain the letter from the bank admitting the mistake caused at their end, which may also be submitted to the A.O. to carry out the necessary changes.
Query 2]
An ancestral House-property, Situated in M.P., was transferred to me, being the eldest, as per the family-partition in the year 2007-08. This property was originally purchased by my two paternal- uncles jointly, in the year 1968-69 for Rs. 18,000/- only (Rs. Eighteen Thousand only), as a family-property, which was transferred to my father in the year 2004-05 according to their family-partitions. I now wish to sell-off this property for Rs. 9.25/-Lacs (Rs Nine Lacs twenty five Thousands only) in this current year 2011-12. I shall be distributing/gifting this amount equally to my three younger brothers & sisters, being the family property.
My queries are:
1. Under the above circumstances, what shall be my quantum of LTCG or any other tax, if any?
2. How much amount I shall be required to invest in the infra-structural Bonds (NHAI etc) or in another house property to minimize or nullify LTCG?
I also wish to point-out here one interesting but may or may not so relevant fact that the original seller who had sold property to my uncles in 1968-69 had also obtained the same in his family-partitions at that time. Please enlighten in the matter. [dilipgpawar@rediffmail.com]
Opinion:
1. From the amount of sale consideration, the expenses incurred in connection with transfer (like brokerage etc) could be reduced to arrive at the figure of Net Sale Consideration. [The sale consideration in your case is Rs. 9.25 Lacs. However, if the value adopted by the Stamp duty authorities is higher than Rs. 9.25 Lacs, then such higher value would be deemed as sale consideration for computing capital gain]
2. The difference between thea) Net sale consideration & b) the fair market value of the property as on 01.04.1981 & indexed cost of improvementwould be treated as “Long term capital gain”
3. The Long term capital gain is taxable @ 20% u/s 112 of the Income Tax Act-1961.
4. In the absence of all the relevant information like fair market value as on 01.04.1981, cost/year of improvement etc the amount of long term capital gain could not be worked out.
5. The first incidence of tax would arise in your hands only. Subsequent gifting of the amount amongst brothers & sister would not enable you to reduce your tax bill.
6. One can save the Long Term Capital Gain tax arising from sale of plot by following mode: a) U/s 54EC:To save LTCG tax u/s 54EC, you are required to invest the amount of Long Term Capital Gain (LTCG) within a period of 6 months from the date of sale/transfer of assets in the specified bonds issued by REC/NHAI.b) U/s 54F: For exemption u/s 54F, subject to various other terms / stipulations, you have to invest the amount of net sale consideration for purchase of a residential house property within a prescribed period.
7. The property to be sold is an ancestral property. You may examine the possibility of treating the property / income as belonging to the HUF.
8. All our readers may please note that the new Direct Tax Code has proposed to replace the base date in respect of old properties from existing 01.04.1981 to 01.04.2000 for computation of capital gain. If it happens so, it would be beneficial to transfer the ancestral/old property after the new DTC regime come in force. However, dust on the DTC has not yet been cleared & the final provisions & the date of its enactment, etc are still not very clear. We will try to cover the tax planning aspects in the new Direct Tax Code vis a vis Income Tax Act after the Government releases the final code & announces its date of enactment.
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