In this article, we will discuss about the summary of Taxation Rules in case of Shares Trading or held as Investment as per Income tax act: Intraday Trading:   1.    Tax Treatment – Intraday trading objective is to earn income or profit from fluctuation in prices of stocks, income from intraday trading is treated as either speculation gain or loss, which comes under the head of business income. It is considered speculative as trading is done without the intention of taking delivery of the contract. 2.   Turnover – Turnover of Equity Intraday Trading = Absolute Profit (Absolute profit means the sum of positive and negative differences from trades) 3.   Taxability – Income from intraday trading is added to the total income for the financial year and consequently is charged at the prescribed tax slab rates. 4.   Treatment of loss – The loss from intraday trades can be carried forward for 4 years. It can only be set-off against Speculative Business Income.   Future & Option Trading:   1..  Tax Treatment – Transactions that take place in futures & options trading are considered as non-speculative business transactions. i.e., profits obtained from F&O trading are taxed in the same way as profits obtained from any other business transaction. This also implies that taxpayers can claim expenses such as electricity, telephone, internet etc. from earnings of the business. 2.  Turnover – Turnover of Futures = Absolute Profit Turnover of Options = Absolute Profit Absolute profit means the sum of positive & negative differences from trades.   3.  Taxability – Income from futures and options is added to the total income for the financial year and consequently is charged at the prescribed tax slab rates. 4.  Treatment of loss – Loss from futures and options trading can be adjusted from income from remaining heads such as rental income or interest income (cannot be adjusted from salary income) in the same financial year. Any unadjusted loss can be carried forward for 8 years. However, in the future, they can only be adjusted from non-speculative income.   Equity Dividends:   1. Tax Treatment – If shares are held for trading purpose, then the dividend income shall be taxable under the head income from business or profession. Whereas, if shares are held as an investment, then income arising in nature of dividend shall be taxable under the head other sources. 2.  Taxability – 10% TDS is deducted on dividend income paid in excess of Rs 5,000 from a company or mutual fund. The dividend received is taxable as per the prescribed tax slabs under the head Income from Other Sources. 3.  Deductions – Where dividend is assessable to tax as business income, deductions of all those expenditures which have been incurred to earn that dividend income such as collection charges, interest on loan etc. can be claimed. Whereas if dividend is taxable under the head other sources, deduction of only interest expenditure which has been incurred to earn that dividend income to the extent of 20% of total dividend income can be claimed.   Short Term Trades:   1.  Tax treatment – If equity shares are sold within 12 months of purchase, the seller may make short term capital gain or incur short-term capital loss. Taxpayers have been offered a choice of how they want to treat such income. Tax payers can treat gains or losses from the sale of shares as ‘income from business”, or ‘Capital gains’. However, once chosen, they must continue the same method in subsequent years. 2.  Taxability – When the sale of shares is treated as business income, one is allowed to reduce expenses incurred in earning such business income. In such cases, the profits would be added to the total income for the financial year and consequently will be charged at the tax slab rates. When the sale of shares is treated as capital gains, the gains are taxable @ 15% plus Surcharge (if applicable) plus 4% Cess u/s 111A, irrespective of the applicable tax slab. Expenses incurred on transfer are deductible. 3.  Deductions – No deductions under section 80C to 80U are allowed from STCG. 4.  Treatment of loss – Any STCL can be set off against STCG or LTCG from any capital asset. If the loss is not set off entirely, it can be carried forward for a period of 8 years and adjusted only against any STCG or LTCG made during these 8 years.   Long Term Trades:   1.  Tax treatment – If equity shares listed on a stock exchange are sold after 12 months of purchase, the seller may make long-term capital gain (LTCG) or incur long-term capital loss (LTCL). 2.  Taxability – LTCG is taxed at concessional rate of 10% plus Surcharge (if applicable) plus 4% Cess for the gains exceeding Rs. 1 Lakh u/s 112A without indexation benefit. Here, the Grandfathering Value concept will apply to give higher exemption, if shares or mutual fund is purchased before February 1, 2018. 3.  Deductions – No deductions under section 80C to 80U are allowed from LTCG. 4.  Treatment of loss – Any LTCL can be set off against LTCG only. If the loss is not set off entirely, it can be carried forward for a period of 8 years and adjusted only against LTCG. Debt Mutual Funds (MF):   1. Tax treatment – Debt MF are those funds whose portfolio’s debt exposure is in excess of 65%. STCG realized on redeeming debt MF units within a holding period of 3 years. LTCG realised on selling units of a debt MF after a holding period of 3 years. 2.  Taxability – STCG are added to the overall income and taxed at the income tax slab rate. LTCG are taxed at a flat rate of 20% with indexation benefit plus Surcharge (if applicable) plus 4% Cess. 3.  Treatment of loss – STCL can be set off against both STCG or LTCG. LTCL can be set off against LTCG only. If the loss is not set off

In this article, we will discuss about the Special Tax Rates Applicable on Special Income such as Short Term Capital Gain, Long Term Capital Gain, Virtual Digital Assets, Casual Income, Lottery Income etc. as follows: Short Term Capital Gain (STCG) u/s 111A:   (i). STCG u/s 111A is applicable in case of CG arising on transfer of equity shares or units of equity oriented MF or units of business trust. (ii). Period of Holding (POH) of < 12 months will be considered (iii). STCG is charged to tax at special 15% flat rate u/s 111A + surcharge (if any) + 4% cess (always). (iv). NO deduction under sections 80C to 80U is allowed against STCG u/s 111A. (v). Basic Exemption Limit (BEL) benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against STCG income u/s 111A. (vi). Rebate u/s 87A is allowed if total income is upto Rs 5 Lakhs & it includes STCG income u/s 111A. (vii). Maximum Surcharge applicable on STCG u/s 111A is restricted to 15% only. (viii). In case of Short Term Capital Loss (STCL) u/s 111A, it can be SET-OFF ONLY against STCG or LTCG in the SAME financial year. (ix). In case, if any STCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (x). STCL can be carry forward for 8 assessment year (AY) & to be set off only against STCG or LTCG & NOT against any other income. Long Term Capital Gain (LTCG) u/s 112A:   (i). LTCG u/s 112A is applicable in case of CG arising on transfer of equity shares or units of equity oriented MF or units of business trust. (ii). POH of > 12 months will be considered (iii). LTCG is charged to tax at special 10% flat rate u/s 112A + surcharge (if any) + 4% cess (always). (iv). Adhoc deduction of Rs 1 lakh on gain amount of LTCG u/s 112A is available in each financial year to the RESIDENT & NRI Individuals. (v). NO deduction under sections 80C to 80U is allowed (vi). BEL benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against LTCG income u/s 112A. (vii). Rebate u/s 87A is NOT allowed on LTCG income u/s 112A. (viii). NO Indexation benefit is allowed on LTCG income u/s 112A. (ix). Grandfathering Concept will apply if Shares or MF is purchased before 1st February, 2018 to give higher exemption from Cost of Acquisition (COA). COA shall be deemed to be higher of the following if listed equity shares or MF purchased before 1st February, 2018: a) Actual cost of acquisition b) Lower of the following: i) Fair Market Value (FMV) of such shares as on January 31,2018, or ii) Actual sales consideration accruing on its transfer. (x). Maximum Surcharge applicable on LTCG u/s 112A is restricted to 15% only. (xi). In case of Long Term Capital Loss (LTCL) u/s 112A, it can be SET-OFF ONLY against LTCG in the SAME financial year. (xii).  In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (xiii). LTCL can be carry forward for 8 assessment year (AY) & to be set off ONLY against LTCG & NOT against any other income. (ivx). If any ULIP is taxable as per amendment in Finance Act, 2021 if the aggregate premium amount paid exceeds Rs 2.5 Lakhs on single or multiple ULIP plans, then any amount received (including bonus) on maturity will be taxable as LTCG u/s 112A @ 10% over & above Rs 1 lakh + 4% cess (always) + Surcharge (If any). However, NO TAXABILITY will arise in case of DEATH of an individual.   Long Term Capital Gain (LTCG) u/s 112:   (1). LTCG u/s 112 is applicable in case of CG arising on Sale of Immovable Property. (2). LTCG u/s 112 will apply on Sales Consideration – Cost of Acquisition. (3). POH of > 24 months will be considered (4). LTCG is charged to tax at special rate @ 20% u/s 112 + surcharge (if any) + 4% cess (always). (5). INDEXATION benefit is ALLOWED on LTCG income u/s 112. Cost of Improvement is also allowed if immovable property is purchased on or after 01.04.2001. (6). NO deduction under sections 80C to 80U is allowed (7). BEL benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against LTCG income u/s 112. (8). Rebate u/s 87A is allowed if total income is upto Rs 5 Lakhs & it includes LTCG income u/s 112. (9). Maximum Surcharge applicable on LTCG u/s 112 is restricted to 15% only. (10). In case of LTCG u/s 112, Exemption u/s 54, 54F & 54EC can be claimed by the individual selling the property as per the term & condition mention in these specific sections. (11). TDS u/s 194IA is deducted @ 1% of actual sales consideration or SDV value, whichever is higher if amount exceeds Rs 50 Lakhs in case of Resident Individuals by the buyer & Form 26QB need to be filed by the buyer. (12). In case of NRI Individuals, TDS is deducted u/s 195 at applicable slab rates + surcharge (if any) + cess @ 4% (always) even if actual sales consideration or SDV value amount is less than Rs 50 Lakhs. TDS is required to be deducted by the buyer & prescribed form need to be filed by the buyer. (13). In case of Long-Term Capital Loss (LTCL) u/s 112, it can be SET-OFF ONLY against LTCG in the SAME financial year. (14). In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (15). LTCL can be carry forward for

Filing income tax returns is a crucial task for every taxpayer. However, it is common to make mistakes or omission certain details while filing Return of Income. In such cases, the income tax department may issue a notice of defective return under Section 139(9) of the Income Tax Act. This notice aims to rectify any errors or omission in the filed return. In this article we will be understanding thoroughly about the Defective Return u/s 139(9) of Income Tax Act,1961. 1. What is Defective Return? A defective return u/s 139(9) refers to an ITR filed that contain any mistakes, errors or inconsistencies. These mistakes, errors or inconsistencies could range from incomplete information to incorrect calculations or failure to disclose certain income sources. When the income tax department identifies such discrepancies in a filed return, they issue a notice of defective return u/s 139(9). 2. Reasons, when defective return notice u/s 139(9) is issued? The defective return notice highlights the specific defects or discrepancies found in the filed return. The defects could include incomplete ITR return filed without considering all heads of income, missing tax information, mismatch between TDS and income, non-compliance with tax audits & more. It is crucial to carefully review the notice & understand the exact nature of the defects mentioned.   3. How to Respond Against 139(9) Notice? For submitting response to notice issued under Section 139(9), assessee need to do the following step: Step 1- Open the Income Tax Portal & login to your account with user ID & password. Step 2- Click on pending actions on the dashboard & then on e-proceedings. Step 3- If there is any proceeding, you will see it in your pending actions.’ Click on view Notices. Step 4- Click on ‘Notice/ Letter pdf’ to view the notice. Step 5- Now, Download Relevant Documents (i.e. AIS/TIS/26 AS/JSON) Related to Previous Return you filed (i.e. Defective Return). Step 6- After Downloading Relevant Document Download Offline Excel Utility from Income Tax Portal. Step 7- Rectify all the Relevant error of Defective Return. Step 8- After That click on Calculate Tax and Generate JSON. Step 9- Now, you have to select the agree-on option and, submit the JSON that you downloaded from Offline Excel Utility. 4. Time limit to Respond against 139(9) Notice – Time Limit for reply to make the necessary corrections in the return is within 15 days of receiving the notice u/s 139(9). If assessee fail to correct the mistake or error in ITR filed within time limit, then it may be deemed as that assessee has NOT filed the ITR for the required assessment year. 5. What if, Defective Return is not Corrected/Responded? If assessee fail to respond to the defective notice within stipulated time period of 15 days, then the ITR return filed by the assessee may be treated as INVALID & consequences such as penalty, interest, NO carry forward of losses, loss of specific exemptions may arise to the assessee, as the case may be in accordance with the Income Tax Act. Some Other Important Points:   How and where the Notice u/s 139(9) is Received? The income tax department sends the defective return notice to the taxpayer’s registered email address. The subject line of the email typically reads “Communication u/s 139(9) for PAN [Assessee PAN Number] for the Assessment Year [A.Y.].” It is essential to regularly check your email & ensure that the email address registered with the income tax department is up to date. What is the password for opening the 139(9) Notice? The notice is attached to the email & is password protected. The password to open the notice is PAN in lower case & date of birth in the format DD/MM/YYYY. Can I file New Return after Issuing Notice u/s 139(9)? Yes, you can either file the return as a New ITR or Revised ITR return in case the time provided for filing the return in a particular assessment year has not lapsed or alternatively assessee can also choose to respond to notice u/s 139(9). However, once the time provided for filing the return for a particular assessment year has lapsed, assessee will not be able file a New ITR or Revised ITR return & he/she will have the only option to respond to notice u/s 139(9). If he/she are unable to respond to the notice, the return will be treated as invalid or not filed for that assessment year. What are some of the common errors that make a return Defective? Some of the common errors that make a return defective are as follows: – Credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation – The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income. – “Gross Total Income” and all the heads of income is entered as “Nil or Zero” but tax liability has been computed and paid. – Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account.  Example of Defective Return –  Mr. X, a salaried individual, filed his ITR return for FY 2023-2024. However, he later received a notice stating his ITR was defective as he had forgotten to include income from his FD account, which the bank had reported to the tax department. To rectify the error, he reviewed the notice, prepared a revised ITR form including the interest income & recalculated his tax liability. He then resubmitted the corrected ITR within the specified timeline & paid any additional tax arises, if any. Finally upon successful submission, he received an acknowledgment from the tax department. By rectifying the defective ITR promptly, he ensured compliance with tax regulations & avoided any potential penalties.   Happy Readings!   Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as

If an assessee having taxable income must file an Income Tax Return (ITR) each financial year. After filing the ITR, the income tax department would process the return & check for any errors, omission or mistake in filing ITR. If the errors, omission or mistake in an income tax notice are minor, a summary assessment called Intimation under Section 143(1) can be completed without calling the assessee. Hence, intimation u/s 143(1) is the most common type of tax notices received from the Income Tax department. On receiving any intimation u/s 143(1), the taxpayer without panicking can take steps to understand the intimation received & further comply with the request received, if any. In this article we will be understanding thoroughly about the Intimation u/s 143(1) of Income Tax Act,1961.   1. What is Intimation u/s 143(1)?   Section 143(1) of the Income Tax Act,1961 involves the initial assessment of a taxpayer’s return. The Central Processing Centre (CPC), Bangalore calculates total income, tax liability & potential refunds based on the provided information. After the assessment, the taxpayer receives an intimation detailing the computed tax demand or refund. If the taxpayer agrees with the adjustments, then no action is required. However, if there are any discrepancies or disagreements then the taxpayer needs to provide clarification or file a Revised Return u/s 139(5) or file a response if return filed seems to be defective by the department u/s 139(9).   2. When Intimation u/s 143(1) is issued?   The department will issue an intimation u/s 143(1) if it needs to make any of the following adjustments in the filed income tax return: Bogus deduction claim in ITR by assessee; Incorrect exemption in ITR; Disallowance of expenses claimed in ITR; Disallowance of loss claimed in ITR; Disallowance of the set-off of losses from the previous year when the return for the related year is filed beyond the prescribed due date. 3. Time Limit for issuing 143(1) Intimation –   The Income Tax Department is required to issue intimation u/s 143(1) within a time limit. Generally, it should be issued upto one year from the end of the financial year during which the assessee files an Income Tax return. However, this period may be extended when the taxpayer’s return is selected for scrutiny assessment or reassessment.   4. What we need to do after receiving 143(1) Intimation?   If assessee have received intimation u/s 143(1)(a), assessee must file a response within the specified timeframe in case any action required to avoid legal complication. On receiving the intimation u/s 143(1), there’ll be two cases, either you’ll agree with the computation done by the department or you’ll not. If you Agree to the discrepancies mentioned in the intimation, this means that you agree with the mismatch. If you do choose this option, you’ll also have to revise your Return of Income. If you Disagree with the discrepancies mentioned in the intimation, this means that you’re not accountable for the mismatch & as a next step, you’ll provide accounts that add up to the difference in mismatch. 5. Options available with assessee if not satisfied with 143(1) Intimation – If an assessee is NOT satisfied with the intimation order u/s 143(1), he will either be required to file a revised return u/s 139(5) or file a response if return filed seems to be defective by the department u/s 139(9). A revised return can be filed for any mistakes committed in filing original return u/s 139(1) by the assessee. Taxpayer also has an alternative to file an Updated Return u/s 139(8A) maximum upto 24 months from the end of the relevant assessment year alongwith additional income tax payment of 25%/ 50% of income tax amount + interest + late fees payable. However, if NO mistakes have been made & assessee do not agree with the adjustments made by CPC/computerized system, he/she can file an online rectification application u/s 154(1) intimating the correction of mistake appearing in the Section 143(1) intimation. 6. Some Other Important Points:   – Password to open the Intimation u/s 143(1) – The attachment received is a password-protected file. The ITR intimation password for opening the attachment/file received is your PAN number in lowercase followed by your date of birth in DDMMYYYY format. For Example: Your PAN is AAGRK5803P and your birth date is 22 November 2003, then the intimation order password to open your online intimation u/s 143 (1) shall be “aagrk5803p22112003”.   – Can demand be issued with 143(1) Intimation –  Yes, Demand can be issued with Intimation u/s 143(1) in case of adjustments made u/s 143(1) due to a discrepancy found & tax liability is arrived at.   – Is Intimation u/s 143(1) and Assessment Order are same –  No, Intimation u/s 143(1) is NOT considered as an Assessment order. An assessment order is issued after a detailed examination of one’s tax returns. – How to file rectification for intimation u/s 143(1)? To file a rectification for intimation u/s 143(1), you can use the online facility provided on the e-filing portal of the Income Tax Department. Log in to your account, go to ‘My Account’, and select ‘Rectification’. Provide the necessary details & reasons for rectification & submit your application. – Different kind of intimations issued by Income Tax Department – a) Intimation with NO demand or NO refund – This generally happens if the department has accepted the return as filed without carrying out any adjustments to it. b) Intimation determining demand – Issued in case of adjustments made u/s 143(1) due to a discrepancy found & tax liability demand has been raised. c) Intimation determining refund – Issued where any tax is found to be refundable either where no discrepancy in the return filed or after making adjustments as referred u/s 143(1) & after giving credit of the taxes & interest paid by the taxpayer. While demand notice is sent in case of final tax liability, refunds if any shall be granted to the taxpayer.   Happy Readings!   Disclaimer: The information contained in this website is provided for

TDS Applicability on Sale of Immovable Property by Non-Resident Indian (NRI): (i). On Sale of Immovable Property (IP) by a NRI SELLER, Capital Gain (CG) will arise to NRI Seller on which he will be liable to pay income tax depending upon the Period of Holding (POH) for which IP is being held by him. (ii). If the POH is < 24 months, then CG on sale of IP will be treated as Short Term Capital Gain (STCG) & will be taxable as per the income tax slab rates applicable to the Individual + Surcharge (If any) + Cess @ 4% (always) will be levied since the assessee is an NRI & In case of NRI Health & Education Cess @ 4% is always applicable. (iii). If the POH is > 24 months, then CG on sale of IP will be treated as Long Term Capital Gain (LTCG) & will be taxable @ 20% u/s 112 with indexation benefit + Surcharge (If any) + Cess @ 4% (always) will be levied since the assessee is an NRI & In case of NRI Health & Education Cess @ 4% is MANDATORY applicable. (iv).  TDS will be required to be deducted u/s 195 would depend on the residential status of the Seller. Since in this case the Seller is a NRI – the amount of TDS to be deducted would depend on the Sale Consideration amount received by the NRI Seller irrespective of the Transaction Value of the Immovable Property. (v). In case Seller is a Resident Indian –TDS amount to be deducted would be 1% of Sale Consideration amount received, ONLY IF the value of actual sales consideration or Stamp Duty Value of IP, whichever is HIGHER exceeds Rs 50 Lakhs. (vi). Buyer of IP is required to deduct TDS on payment made to NRI Seller. The buyer while paying the amount to the NRI seller will deduct TDS & pay the balance to the seller. TDS which has been deducted by the buyer would then be required to be deposited with the Income Tax Department by the buyer. (vii). The residential status of the buyer would NOT be considered & only the residential status of the seller would be considered for computing the amount of TDS to be deducted on sale of IP.   Effective Rate of TDS on Sale of Property by NRI in Case of Long-Term Capital Gain (LTCG) TDS on Sale of Property by NRI Seller is required to be deducted by the buyer as per the income tax rates as mentioned:                                   Property Sale Price (Rs)   Less than Rs 50 Lakhs Rs 50 Lakhs to Rs 1 Crore Rs 1 Crore to Rs 2 Crores Rs 2 Crore to Rs 5 Crores Above Rs 5 Crores LTCG Tax Rate u/s 112 20% 20% 20% 20% 20% Add: Surcharge Nil 10% of above amount 15% of above amount 15% of above amount 15% of above amount Total Tax (including Surcharge) 20% 22% 23% 23% 23% Add: Health & Education Cess 4% 4% 4% 4% 4% Applicable TDS Rate (including Surcharge & Cess) 20.80% 22.88% 23.92% 23.92% 23.92% Note – No Basic Exemption limit will be available to NRI Seller in case his Total Income consists of Only LTCG u/s 112. Also, NO deduction u/s 80C to 80U will be allowed to NRI Seller against this income. Maximum Surcharge applicable in case of LTCG u/s 112 on sale of Immovable property is restricted to 15% of tax amount only.   – As per AMENDMENT in Finance Act, 2023 (i.e. from 1st April, 2023) if NRI Seller is claiming EXEMPTION u/s 54 & 54F then the exemption limit u/s 54 & 54F has been RESTRICTED to Rs 10 Crores. – INDEXATION benefit is ALLOWED on LTCG income u/s 112. Cost of Improvement is also allowed if immovable property is purchased on or after 01.04.2001. – In case any ADVANCE MONEY is FORFEITED on failure of negotiations for transfer of capital assets then: a) If advance money was received & forfeited before 01/04/2014, then deducted from cost of acquisition while computing CG. b) If advance money was received & forfeited after 01/04/2014, then it will be taxable as “Income from Other Sources”. – In case of Long-Term Capital LOSS (LTCL) u/s 112, it can be SET-OFF ONLY against LTCG in the SAME financial year. In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). LTCL can be carry forward for 8 assessment year (AY) & to be set off ONLY against LTCG & NOT against any other income. – In case of Short-Term Capital Gain (i.e. if the Property has been held for < 24 months by the seller), this Surcharge & Cess would be added to the applicable Income Tax Slab Rate in the same manner as explained above for LTCG u/s 112. – TDS is required to be deducted whenever any PAYMENT is made to the NRI Seller for purchase of property by the Buyer. Even if any ADVANCE is being paid for purchase of property – TDS is required to be deducted. – Moreover, this TDS on purchase of Property from NRI Seller is required to be deducted irrespective of the Transaction Value of the Property. Even if the value of property is less than Rs. 50 Lakhs, TDS is required to be deducted.   Other Points to be Considered on Sale of Immovable Property by NRI Seller:   (1). TDS on sale of immovable property by NRI Seller is required to be deducted u/s 195 on the Sale Consideration amount. (2). Since the TDS to be deducted on sale of immovable property by NRI Seller on the Total Sale Consideration amount is a hefty amount. NRI Seller can apply for LOWER or NIL deduction of TDS Certificate. (3). The Seller is required to give this LOWER or NIL deduction of TDS Certificate to the

In this article we will discuss in detail regarding the DEFAULT New Tax Regime as per Section 115 BAC & Old Tax Regime applicability for the Financial Year 2023-24– Points to be remembered while taking the option of NEW TAX REGIME for FY 2023-24 (AY 2024-25) are:   (1). NEW TAX REGIME is applicable to all INDIVIDUALS (whether Resident or Non-Resident, Senior Citizen or Super Senior Citizen), HUF/AOP/BOI/Artificial Juridical Person (NOT applicable for Co-operative Society) for FY 2023-24 (AY 2024-25). Basic Exemption Limit of Rs 3,00,000 is applicable to ALL the TAXPAYERS as mentioned irrespective of their AGE or Residential Status.   (2). Income Tax Slab Rates applicable to Individuals/HUF/AOP/BOI/Artificial Juridical Person (NOT applicable for Co-operative Society) for FY 2023-24 (AY 2024-25) in Budget 2023 will be: Up to Rs 3,00,000 Nil Rs 3,00,000 to Rs 6,00,000 5% Rs 6,00,001 to Rs 9,00,000 10% Rs 9,00,001 to Rs 12,00,000 15% Rs 12,00,001 to Rs 15,00,000 20% Above Rs 15,00,000 30% Note – Surcharge (if any) will apply if Total Taxable Income exceeds the specified limit of income + Health & Education Cess @ 4% (always) will apply.   (3). Under NEW TAX REGIME for FY 23-24, ONLY Standard Deduction of Rs 50,000 is allowed to salaried employees & pensioners. Other Deduction & Exemption such as u/s 80C, 80D, 80CCD(1B), 80TTA, 80G, Interest on house property loan u/s 24(b), HRA, LTA etc. will NOT be allowed to taxpayer. (4.) Apart from above deduction, only 2 deduction is allowed under NEW TAX REGIME namely – Section 80CCD(2) – NPS Contribution by Employer & Section – 80JJAA – Tax deduction on generating EMPLOYMENT can be claimed by employers from their Business Income Certain Conditions need to be fulfilled before claiming deduction u/s 80JJAA). (5). NEW TAX REGIME will be the DEFAULT tax regime at the time of filing ITR for FY 2023-24 (AY 2024-25). However, taxpayer has the OPTION to CHANGE from NEW TAX REGIME (Default Regime) to OLD TAX REGIME as per their convenience. (6). Tax Rebate u/s 87A will be allowed on Taxable Income up to Rs 7 lakhs under New Tax Regime for FY 2023-24 (AY 2024-25). Total rebate allowed under this section is Rs 25,000 on taxpayer tax liability BEFORE surcharge & cess. (7). Also, if taxpayer tax liability exceeds more than their income exceeding Rs 7 Lakhs then MARGINAL RELIEF CONCEPT will be applicable to taxpayers due to hardship of paying taxes exceeding their slabs income if income exceeds Rs 7 lakhs. Marginal Relief will apply to the Individuals opting for New Tax Regime u/s 115BAC having income marginally exceeds Rs 7 Lakhs. Hence, Individuals with an annual income ranging in between Rs 7,50,0000 – Rs 7,77,778 will get Marginal Relief benefit in case of tax payment. (9). Family pensioners can also claim standard deduction of Rs 15,000 under New Tax Regime. g) Maximum Highest Surcharge rate applicable (if any) has been reduced to 25% from 37%.   Points to be remembered while taking the option of OLD TAX REGIME for FY 2023-24 (AY 2024-25) are:   (1). OLD TAX REGIME is applicable to Resident INDIVIDUALS, Senior Citizen (Age 60 years or more) or Super Senior Citizen (Age 80 years or more), HUF for FY 2023-24 (AY 2024-25). (2). Basic Exemption Limit (BEL) of Rs 2,50,000 is applicable to INDIVIDUAL Taxpayer, Rs 3,00,000 to Resident Senior Citizen, Rs 5,00,000 to Resident Super Senior Citizen. BEL will be allowed against STCG u/s 111A, LTCG u/s 112A & LTCG u/s 112. (3). For NON-RESIDENT Individuals (whether Normal Citizen, Senior Citizen or Super Senior Citizen), BEL of Rs 2,50,000 is applicable. NO HIGHER BEL will be allowed to NRI. Also, NO BEL will be allowed to NRI against STCG u/s 111A, LTCG u/s 112A & LTCG u/s 112. (4). Income Tax Slab Rates applicable to Individuals (below 60 years of Age), HUF for FY 2023-24 (AY 2024-25) will be:   Up to Rs 2,50,000 Nil Rs 2,50,000 to Rs 5,00,000 5% Rs 5,00,001 to Rs 10,00,000 20% Rs 10,00,001 to Rs 12,00,000 30% Note – a) Surcharge (if any) will apply if Total Taxable Income exceeds the specified limit of income + Health & Education Cess @ 4% (always) will apply. b) For Resident Senior Citizen – BEL of Rs 3,00,000 & for Resident Super Senior Citizen, BEL of Rs 5,00,000 will apply.   Deductions Allowed Under Old Tax Regime:   Under OLD TAX REGIME for FY 23-24, ALL Deduction & Exemption available to Salaried Individual taxpayers & other taxpayer will be allowed such as deduction: (1). Under Section 80C (LIC, PPF, EPF, ELSS Mutual Fund, ULIP, 5 Years FD, NSC, SSY, Tuition Fees of any 2 children, Repayment of Housing Loan Principal, Stamp Duty, Registration fees for acquisition of House property, Contribution to NPS account) – Maximum upto Rs 1.5 Lakhs 2) Section 80D: – a) Premium paid on health insurance & expense incurred towards preventive health check-up can be claimed as a deduction. b) Individual & HUF can claim deduction. An individual can claim a deduction for health insurance premium & expense incurred towards preventive health check-up for self, spouse, dependent children & parents. c) Limit of deduction – For a person aged below 60 years, the deduction limit u/s 80D is upto 25,000. The limit of 25,000 includes 5,000 on preventive health check-up. If the age of the insured is above 60 years, the deduction limit increases upto 50,000. Premium amount to be paid by any mode other than CASH. (3). Section 80CCD(1B) – It provides additional deduction for contributing to Pension Scheme of CG, National Pension Scheme (NPS), Atal Pension Yojana in respect of any amount paid up to Rs. 50,000, If contribution is made in Tier – 1 of NPS account. (4). Section 80E – Deduction on INTEREST paid of Education Loan for higher studies. Deduction is available ONLY on INTEREST amount paid on loan for a maximum of 8 Years from the year in which interest repayment begins & NOT on the principal amount

In this article, we will discuss about tax treatment of various different Income & Investments made are: (1). Public Provident Fund (PPF) –   a) Fully Tax exempt (Both Principal & Interest amount are fully tax exempt at the time of maturity). b) Section – 80C deduction is available up to Rs 1.5 Lakhs. c) Minimum investment amount = Rs 500 & Maximum investment amount = Rs 1,50,000 d) Lock-in-period = 15 years, Interest rate is 7.10% p.a. e) For better interest earning, Investor can invest in PPF on or before the 5th date of the month to cover larger portion of interest earning whether investing through lumpsum or SIP mode. (2). National Pension Scheme (NPS) –   a) 60% amount are tax exempt & balance 40% are taxable. Annuities have to be purchased of balance 40% amount. b) Amount received from balance 40% annuities as pension will be taxable as per the income tax slab rates of the individual. c) Section – 80C deduction is available up to Rs 1.5 Lakhs for NPS contribution. Section – 80CCD(1B) additional deduction of Rs 50,000 is also available. d) Contribution to NPS is made in TIER-1 account only, Lock-in-period = Till the individual attain 60 years of age. e) In case the total corpus of NPS Contribution is LESS THAN Rs 2 Lakhs, then FULL amount can be withdrawn. f) In case of Medical Emergency, Marriage, Higher Education – NPS can be withdrawn up to certain limit after satisfying certain condition even before 60 years of age of Individual. (3). ELSS Tax Saver MF –   a) Due to 3 years lock-in-period in ELSS Tax Saver MF, it will always be treated as Long Term Capital Gain (LTCG) taxable @ 10% + 4% Cess (Surcharge, if applicable) over & above Rs 1 lakh gain u/s 112A. b) No Indexation benefit will be available. No Rebate u/s 87A will be allowed c) Section – 80C deduction is available up to Rs 1.5 Lakhs. d) In case of SIP Investment, on every SIP investment it will be treated as new purchase & 3 years lock-in will be counted from that date. (4). Employee Provident Fund (EPF)–   a) Minimum contribution by employer 12% of Basic Salary + D/A. b) Contribution can be made by both Employer & Employee. Interest rate is 8.15% p.a. c) Contribution amount is allowed as deduction u/s 80C up to Rs 1.5 Lakhs. d) Maturity amount is tax free only on completion of 5 years of period of employment. EPF can be withdrawn while permanently quitting the job or transferring from one job to another. e) INTEREST received on EPF will be TAXABLE if INTEREST amount received exceeds Rs 2.5 Lakhs during a financial year under the head Income from Other Sources as per slab rates of the individual. i.e., Principal amount of EPF contribution will be EXEMPT but INTEREST received on EPF contribution will be TAXABLE if INTEREST amount received exceeds Rs 2.5 Lakhs during a financial year. (5). Mutual Fund (Equity Oriented), Equity Shares & Units of Business Trust – a) If MF (Equity Oriented), Equity Shares & Units of Business Trust are held for < 12  months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable @ 15% + 4% Cess (Surcharge, if applicable) u/s 111A. b) If MF (Equity Oriented), Equity Shares & Units of Business Trust are held for > 12  months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 10% + 4% Cess (Surcharge, if applicable) over & above Rs 1 lakh gain u/s 112A. No Indexation benefit will be available. No Rebate u/s 87A will be allowed. c) Basic Exemption limit will be allowed to RESIDENT individuals on STCG u/s 111A & LTCG u/s 112A. Maximum SURCHARGE payable on tax amount u/s STCG u/s 111A & LTCG u/s 112A will be restricted to 15%. (6). Mutual Fund (Debt Oriented), Any other Capital Assets – a) If MF are held for < 36 months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). b) If MF are held for > 36 months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 20% (with INDEXATION benefit) + 4% Cess (Surcharge, if applicable). However, as per AMENDMENT in Budget 2023 (i.e., from 1st April, 2023), LTCG on sale of debt oriented MF will be taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). c) Any other capital assets INCLUDES Bullion, Jewellery, Archaeological Collection, silver, Utensils, Precious Stones, Drawings, Paintings or any other capital assets. (7). Sale of Immovable Property (Land & Building), Unlisted Shares – a). If property is held for < 24 months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). b). If property is held for > 24 months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 20% (with INDEXATION benefit) + 4% Cess (Surcharge, if applicable) u/s 112. Cost of Improvement will also be available. c). Basic Exemption limit will be allowed to RESIDENT individuals, Maximum SURCHARGE payable on tax amount will be restricted to 15% on LTCG u/s 112 (Sale of Immovable Property) NOT against Unlisted Shares. d). Exemption u/s 54 & 54F can be claimed by assessee selling immovable property if assessee invest the amount of sale consideration 1 year before or 2 year after date of sale in purchasing any other Residential House Property or Construct any house property within 3 year after date of sale. However, the NEW residential house property purchased CANNOT be sold within 3 years from date of purchase of property, otherwise the LTCG exempted earlier will be taxable & any gain

Section 194IB of Income Tax Act, 1961 is applicable on TDS to be deducted on TDS on Rent Payment by Certain Individuals or HUF. Any Individual or HUF is required to deduct TDS @ 5% before making the payment to the resident recipient of rent if rent amount for each month exceeds Rs 50,000. Rent means payment made for letting out, tenancy, lease, sub-lease or any other agreement or arrangement of renting or letting out of Plant, Machinery, Land, Building, Factory Building, Furniture, Fixtures or Fittings.   Important Points to be remember in Section 194IB are:   (1). As per Section 194IB, it is mandatory for any person (Individuals or HUF not liable for Tax Audit u/s 44AB) who pays another other RESIDENT person any income by way of RENT for a month exceeding Rs 50,000 must deduct TDS @ 5%. (2). The TDS to be deducted @ 5%: i) time of credit of rent (for the LAST MONTH (March) in the financial year or the last month in which tenant is vacating the property if the property is vacated before or during the year); OR ii) at the time of actual payment of the rent whichever is earlier. (3). If the PAN of the recipient is NOT available then the rate of TDS will be 20%. However, the TDS amount CANNOT exceeds the last month rent. (4). For deducting TDS, there is NO requirement of obtaining TAN. (5). Challan-cum-statement in Form 26QC will have to be submitted. TDS certificate in Form 16C need to be issued by person deducting tax. (6). TDS u/s 194 IB is to be deducted only if rent payment is made to RESIDENT. If rent is paid to NRI owner of property, then NO TDS u/s 194IB. Tenant may be Resident or Non-Resident. Rent paid by tenant may be for residential or commercial purpose. Example –   Mr. Saurabh, a salaried employee, pays rent of Rs 80,000 per month to Mrs. Jyoti for the FY 2022-23. Is Mr. Saurabh is required to deduct TDS as per Income tax Act, 1961? What if Mr. Saurabh has vacated the property in December, 2022. What will be his TDS liability? What if in March 2023, Mrs. Jyoti did not furnish her PAN to Mr. Saurabh. What will be his TDS liability? Answer –   As per Section – 194IB, Since Mr. Saurabh is paying RENT in excess of Rs 50,000 per month in FY 2022-23, he will be liable to deduct TDS @ 5% on payment of such rent amount to Mrs. Jyoti. Hence, Rs 80,000 * 12 month * 5% = Rs 48,000 TDS will be deducted from LAST MONTH (MARCH) rent payment by Mr. Saurabh to Mrs. Jyoti. Net payment of Rent in March 2023 will be Rs 80,000 (Rent Amount) – Rs 48,000 (TDS) = Rs 32,000. If Mr. Saurabh has vacated the property in December, 2022, then TDS will be deducted in December, 2022 of Rs 80,000 * 9 months * 5% = Rs 36,000 TDS for the LAST MONTH (December 2022) in which tenant is vacating the property if the property is vacated before or during the year or LAST MONTH (March 2023) in the FY 2022-23, whichever is EARLIER. If Mrs. Jyoti does NOT furnishes her PAN to Mr. Saurabh, TDS @ 20% will be deducted. However, the TDS amount CANNOT exceeds the LAST MONTH rent. i.e., Rs 80,000 * 12 months * 20% = Rs 1,92,000 TDS but TDS CANNOT exceeds the last month (March 2023) rent amount (Rs 80,000). Hence, Rs 80,000 TDS will have to be deducted by Mr. Saurabh in case Mrs. Jyoti does NOT furnishes her PAN. (7). Consequences of NOT deducting or depositing TDS: If any person fails to deduct or deposit TDS, then he/she has to pay interest @ 1% per month or part thereof from the date on which TDS is actually deductible to the date when TDS is actually deducted. If the person deducted the TDS but fails to deposit the TDS on time (on or before the 7th of next month, In March month – on 30th April), then he/she has to pay interest @ 1.5% per month or part thereof from the date of TDS deduction to the actual date when TDS is deposited.   Happy Readings!   Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

There are multiple benefits available to Senior Citizens in respect of filing ITR which is as follows: (1). Higher Basic Exemption Limit (BEL):   Senior citizens are granted a higher exemption limit as compared to normal individual tax payers. BEL is the income up to which a person is not liable to pay tax. The exemption limit granted to a resident senior citizen for the financial year 2022-23 is Rs 3,00,000. An additional benefit of Rs. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal individual tax payers. (2). Age Criteria of a person to qualify as a senior citizen under the Income-tax act, 1961:   Higher basic exemption limit is available only to a Resident senior citizen. These benefits are not available to a non-resident even though he may be of higher age. He must be of the age of 60 years or above but less than 80 years at any time during the relevant financial year & must be resident. (3). Exemption from payment of advance tax to a senior citizen:   Every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, Income tax act gives relief from payment of advance tax to a resident senior citizen during the relevant financial year if he has not having any income from business or profession, then he is not liable to pay advance tax. (4). Benefits available in respect of interest on deposits to senior citizens:   Section 80TTB ​of the Income Tax act gives tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount upto Rs. 50,000 earned by the senior citizens. Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this section. (5). TDS deductions under Section 194A:   Section 194A of the Income Tax act provides that no TDS shall be deducted from payment of interest by bank or post-office or co-operative bank to a senior citizen up to Rs. 50,000. Limit is to be computed for every bank individually. (6). Benefits of Standard Deduction:   Senior citizens who is in receipt of pension income from his former employer can claim a deduction upto Rs 50,000 against such income. (7). Higher Deduction limit for Medical Insurance Premium under section 80D:   Maximum limit for deduction u/s 80D in respect of payment made for health insurance premium in respect of a senior citizen has been allowed at Rs. 50,000 as against that allowed to other individuals at Rs. 25,000. Deduction upto Rs. 50,000 is also allowed for medical expenses incurred on the health of a Senior Citizen provided no amount is paid for health insurance of such person. For claiming this deduction, it is mandatory that the health insurance premium/ medical expenses are paid by any mode other than cash. (8). Higher Deduction Limit in respect of expenses incurred for Medical Treatment of a specified disease or ailment:   For general taxpayers, the amount of deduction available in respect of expenses incurred for medical treatment of specified disease or ailments of self or dependent relative’s u/s 80DDB is Rs 40,000. However, in case the expenses are incurred by the taxpayer in respect of a dependent senior citizen, the entitlement is Rs. 1 lakh in a year. (9). Form No. 15H for Non-deduction of TDS:   A senior citizen may submit Form No. 15H to the deductor for non-deduction of TDS on certain incomes referred to in that section, if the tax on his/ her estimated total income of the relevant financial year comes to nil. In case of Senior Citizens, this form can be submitted if the Total Income after Deductions is less than the minimum amount exempted from the levy of tax whereas in case of non-senior citizens this form is applicable if the Total Income before deductions is less than the minimum amount exempted from levy of tax. Hence, in case of Senior Citizens the benefit is higher & therefore Form 15H is to be filed whereas Form 15G is to be filed in case of non-senior citizens. (10). Income tax provision on Transfer of Capital asset under ‘Reverse Mortgage Scheme’:   The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain (nor under any other head of income). (11). Conditions under which certain specified senior citizens are not required to file ITR:   From AY 2022–23, in case of senior citizens of the age of 75 years or above having only pension income and interest income only from the account(s) maintained with a bank in which they receive such pension, such senior citizen shall not be required to file their ITRs. The specified bank shall be responsible for computing their total income and deducting tax thereon after giving effect to various deductions allowable under Chapter VI-A and rebate u/s 87A of the Act under Section 194P of Income Tax Act, 1961. (12). Income Tax Slab Rates for Senior Citizens:   (A). Slabs Rates for Senior Citizens of the age from 60 to 80 years under Old Scheme – INCOME SLAB RATE OF INCOME TAX Upto Rs. 3,00,000 NIL Rs. 3,00,001 to Rs. 5,00,000 5% Rs. 5,00,001 to Rs. 10,00,000 20% Above Rs. 10,00,000 30% (B). Income tax Rate Slabs for Senior Citizens of the age from 60 to 80 years under New Scheme: INCOME SLAB                                                        RATE OF INCOME TAX Upto Rs. 2,50,000 NIL Rs. 2,50,001 to Rs. 5,00,000 5% Rs. 5,00,001 to Rs. 7,50,000 10% Rs. 7,50,001 to Rs. 10,00,000 15% Rs. 10,00,001 to Rs. 12,50,000 20% Rs. 12,50,001 to Rs. 15,00,000 25% Above Rs. 15,00,000 30% Note – 1) Surcharge will apply If taxable income is more than Rs. 50 lakhs @ 10% & other specified