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10 Questions He Asked to Help His Friend. Good!

January 15, 2007 By taxworry 2 Comments
A friend Mr Selvaraj sundaram_selvaraj@.in has not filed IT in his life even though there has been Form 16′s with tax deductions. He has asked following questions to help his friend. Answers are given below the question itself

(1) How to file the IT returns for the last few years?
Answer 1: Even if one forgets to file the return during one year from the end of assessment year for any Genuine reason , still return can be filed . The commissioner of income tax who has the jurisdiction over your friend can be prayed u/s 119[2][b] of the I T Act for condoning the delay in filing the return.Your friend can file return even for six back years.
(2) Will there be any monetary penalty for every year of non-filing?
Answer 2: Yes, there can be , if commissoner thinks so . But if there is genuine reason , he may condone it . Frankly, few CIT will do that.

(3) If for a particular year, if some tax is due, what is additional penalty.
Answer 3: The rate of penalty is minimum 100% to 300% of tax sought to be evaded. But remember, you will also be imposed with interest u/s 234B and 234C of the I T Act. However, even these interest can be waived by CIT or CCIT through a separate application.
(4) If and in case, there is refund possible, will it be given?
Answer 4.Yes , Refunds can be given. In fact most of the application u/s 119[2][b] of the I T Act are for refunds claim.
(5) There could be some capital gains/losses from investments in mutual funds, stocks, margin trade and derivatives. What are the different rates of taxes for short and long terms? Is the thumb rule same for the last decade?
Answer 5 No , long term gains is tax free from Asst Yr 2005-06 and 10% on short term. Before that Long term was 20% or 10 % and short term was normal tax rate .
(6) What is the minimum income for a person, to file a return for a given fin year over the decade? what are the std deductions and exemptions?
Answer 6: From Fy 1995-96 to 1997-98 Rs 40000 ;
From FY 1998-99 to 2004-05 Rs 50000;
From FY 2005-6 Rs 100000.
(7) From July 2005 STT is deducted for mutual fund redemptions, how is that to be used in calculating capital gains?
Answer 7 : There is no deduction or rebate or allowance of STT in case of capital gains even if STT is deducted on mutual funds. Section 88E is there for relief on account of STT , but only if the shares or equity or mutual fund income were taxable under the head “Profit from Business “.

(8) His investments have been from the joint account with his wife. So can he only declare only 50% of gains? (while the other 50% may bot be greater than the minimum amount required for filing a return for his wife.
No and Yes. If he was the only earning member and he kept depositing the money in an account opened jointly with his wife, incme from such joint account is his and even if shown under his wife’s income, shall be clubbed as per provision of section 64 of the I T Act.
Yes, if the wife had independent income , only 50% of gains can be shown.
(9) He has had USA income for sometime in between, always being a resident of India, for which taxes have been deducted there. Does the double tax avoidance treaty hold good here?
Answer 9:Yes, article 25 of DTAA holds good.
(10) For how many years, one is expected to keep the bank/stock-broker/mutualfund /tax-deduction records?
Answer 10: The maintenance of accounts are mandatory for only specified types of persons under the I T Act. You read this .

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Comments

  1. sarvesh tripathi says:
    February 5, 2010 at 3:30 pm

    hello…sir i m filing the return but company is not deposited the tds 4quarter. show the certificate 16A till file. in case refund is not allowed the income tax department.

  2. Dilip Jain says:
    June 3, 2010 at 11:45 pm

    Hello sir,
    last year as a stimulus package for stock market, finance ministry came out with a provision which provides stt can be refunded to the tune of loss incured in a year…sir, can i know under which section??? also, i tried to find this out but coudn’t…kindly help…

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