CA. Naresh Jakhotia

“LTCG: PAYING TAX MAY BE BETTER THAN SAVING TAX” CA. PAYAL MANISH RATHI THE FACT: - Long Term Capital Gain (LTCG) is blatantly taxable @ 20%. - No deduction under Chapter VIA (like u/s 80C towards PPF/LIC/NSC etc) is available against the Long term capital gain. TAX SAVING OPTIONS: A tax payers having long term capital gain have the following two options: - Pay Tax @ 20% or - Save Tax by investing in Approved mode. SAVING LTCG TAX U/S 54EC: One of the most popular tax saving option for all spectrum of tax payers is to save tax by investing the LTCG in the bonds issued by the - National Highway Authorities of India (NHAI) or - Rural Electrification Corporation (REC). This are very commonly referred to as the “54EC Bonds”. The maximum amount that can be invested in such bonds is Rs. 50 Lacs p.a. Presently, Interest offered by NHAI/REC on this bond is around 6% p.a. The fund has an opportunity cost. The fund, if not invested in the 54EC bonds, can be utilized elsewhere having higher retur...

TAX TALKBY CA. NARESH JAKHOTIA (Chartered Accountant) “DUE DATE OF PAYMENT FOR TDS DONE IN THE MONTH OF MARCH-2011 IS 30th APRIL 2011” Query 1] Due to my carelessness, I could not file my return of income for the F Y 2009-10. If I file now i.e., in April 2011, whether penalty of Rs. 5,000/- will be imposed compulsorily in the following scenarios: 1. Gross Total Income below exemption limit. 2. Net Income below exemption limit. 3. Self assessment tax is paid 4. Refund Due. [itr_ngp@rediffmail.com] Opinion: 1. The penalty of Rs. 5,000/- may be levied for non-filing the income tax return if the assessee, who is required to file the income tax return, fails to file the income tax return on or before the end of the relevant Assessment year. The liability to file the income tax return, for individual/HUF, arises if the Gross Total Income exceeds the maximum amount not chargeable to tax. 2. The penalty is not a compulsory or mandatory penalty. The penalty shall be imposable after giving a rea...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “INCOME TAX ON SALE OF SHARES & MUTUAL FUNDS” Query 1] I had purchased some shares and Mutual fund a few years back (exact date can not be determined). I have sold these in the previous year 2010-11. Will it attract long- term capital gain tax? Will it be taxable or tax free? Please clarify. [jyti_mhjn@rediffmail.com ] Opinion: 1. INCOME ON SALE OF SHARES: - a) For sale within a period of one year from the date of its purchase, the difference between sale price & cost of acquisition would be treated as Short Term Capital Gain in the hands of Investor & would be taxable @ 15% u/s 111A of the I.T. Act-1961.b] For sale after one year from the date of purchase, the difference between sale price & cost of acquisition would be treated as Long Term Capital Gain in the hands of Investor & would be exempt from tax u/s 10(38). 2. INCOME ON SALE OF MUTUAL FUNDS: - The tax treatment of income arising from sale of mutual...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “FILING INCOME TAX RETURN FOR THE F.Y. 2010-2011” Query 1] I remember to have read that an individual can get exemption of 1 Lacsunder section 80C by investing in the PPF. Rs.70000/- in own name & Rs. 30,000/- in relatives of six categories, as stated in Tax Talk dated 04.04.2011expressed by you. Of course, the relative concerned cannot claim the exemption nor mention in his returns. I shall be obliged for getting the opinion on this early in view of the time for submitting the returns early. [shivdev_gupta@hotmail.com]Opinion:1. Deduction u/s 80C is available for deposit in the PPF A/c of the spouse or children of the Individual.2. In Tax Talk dated 04.04.2011, it was mentioned that the Gift from “Relatives” is not taxable U/s 56(2) (vii). The seven categories of the persons mentioned therein are with reference to the “Relatives” for the purpose of Gift only. Deposit in the PPF A/c of those persons may not enable you to claim ...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “GIFT RECEIVED FROM GRANDMOTHER’S BROTHER – TAXABLE OR EXEMPT?” Query 1] Gift is received by an individual from Grandmother's Brother. Whether exempt u/s. 56(2) of the IT Act, 1961? Any case law to support such claim? [ sthiagamohan@gmail.com ] Opinion: 1. Gift exceeding Rs 50,000/- in a year is taxable in the hands of recipient (Donee) U/s 56(2) (vii) of the I.T. Act, 1961.However, gift shall not be taxable if it is received from the Relative. 2. The term Relative, for the purpose of Section 56(2(vii) means- (i) spouse of the individual;(ii) brother or sister of the individual;(iii) brother or sister of the spouse of the individual;(iv) brother or sister of either of the parents of the individual;(v) any lineal ascendant or descendant of the individual;(vi) any lineal ascendant or descendant of the spouse of the individual;(vii) spouse of the person referred to in clauses (ii) to (vi). 3. The definition of the term “Relative” ...