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Old 21st June 2017, 20:30   #1141
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It could also be that he's planning to do annualized capital gains/losses and declaring them (and paying taxes) every year (instead of what most of us do - calculate CG only at redemption time).
Hi binand, he or for that matter no tax practitioner can do that, because it's only when one redeems you get profits. All else is just in paper! The paper profits can be lost when the market crashes. For example even if market crashes you don't lose money unless you sell.
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Old 21st June 2017, 20:53   #1142
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Hi binand, he or for that matter no tax practitioner can do that, because it's only when one redeems you get profits. All else is just in paper! The paper profits can be lost when the market crashes. For example even if market crashes you don't lose money unless you sell.
You are right that the profits are only on paper, but professionals (auditors, corporates etc.) need to calculate tax on that on-paper value. It is called accounting on accrual basis. We as individuals mostly do it the other way (only when we see the money) which is called accounting on cash basis. For CG the IT act permits only accrual basis so the CA has to do it that way or he'll get into trouble.

Also, if you lose money on shares you can book capital losses and adjust it against your (future) tax liability. So you don't lose out as a matter of fact.
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Old 21st June 2017, 21:37   #1143
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Default Re: All Income Tax Queries (refunds, disputes, rates etc...)

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I just saw the original query. It could also be that he's planning to do annualized capital gains/losses and declaring them (and paying taxes) every year (instead of what most of us do - calculate CG only at redemption time).
I am no expert, but i think the above only applies to investments such as FDs (and may be other liquid assets like NSC etc). Example: Banks send yearly Form-16s with details of accrued interest on FDs in a year and TDS deducted, even though the FDs are still in force.

However for equity MFs, if there was no sale, then there is no question of any CG. Let's say i invested Rs 10,000 in a MF in December, and it's value at end of March is Rs 12,000, with a notional gain of 2,000. If this has to be taxed on accrual basis, will you apply short term capital gain tax now because it's only 3 months now? Even though i have no intention of selling it in less than a year? I don't think anybody does it like this.
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Old 21st June 2017, 21:44   #1144
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However for equity MFs, if there was no sale, then there is no question of any CG.
You probably are right. I am no expert either, and in my own case I show capital gains only when I sell.
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Old 22nd June 2017, 06:20   #1145
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Does anyone know if it is necessary to know the PAN number of the buyer of your used car? If yes, when was this rule installed?

Also, when was the need to collect TCS on sale of used cars started?
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Old 22nd June 2017, 06:50   #1146
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Does anyone know if it is necessary to know the PAN number of the buyer of your used car? If yes, when was this rule installed?

Also, when was the need to collect TCS on sale of used cars started?
If it is over ten lakh yes you need to do this.

And then if you accepted payment for your 2009 car in cash I am sure the tax guy will surely query it if he sees it.
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Old 22nd June 2017, 07:04   #1147
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Yes, but the question is for a car SOLD in 2009, was it then needed to get the PAN? And was TCS there then?
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Old 22nd June 2017, 07:12   #1148
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Yes, but the question is for a car SOLD in 2009, was it then needed to get the PAN? And was TCS there then?
They can query any transaction that you made and any income that you received in the past 20 years.
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Old 22nd June 2017, 07:15   #1149
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I get that; but did the law as it stood in 2009 specify the need to get the PAN of the buyer, and was TCS on the statute books then.
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Old 22nd June 2017, 07:18   #1150
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I get that; but did the law as it stood in 2009 specify the need to get the PAN of the buyer, and was TCS on the statute books then.
Maybe not tcs but quoting pan for large transactions has been a thing for many years now.

Always ask for pan besides id and address proof of the buyer and keep it with you, he may have paid you with black money and tracing that they might hit upon your tax return.
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Old 22nd June 2017, 07:26   #1151
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I found that TCS on cars started only in June 2016. Does anyone else know whether obtaining PAN was mandatory in 2009? In the sense that selling a used car in 2009 to someone that could not quote his PAN was illegal. I obtained and have a copy of the driver license since that was necessary to avoid issues in case of accidents post sale and the like.

If PAN was necessary, I would appreciate knowing the section number or rule number which made this necessary in 2009.
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Old 22nd June 2017, 08:06   #1152
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Does anyone else know whether obtaining PAN was mandatory in 2009?
Google is our friend:

http://www.rediff.com/money/2006/sep/05pan.htm

"It is necessary to quote the PAN in documents related to the following transactions:

[...]

Sale or purchase of a motor vehicle requiring registration other than two-wheelers."

Doesn't exempt seconds sales. I think what this means is that the transfer of registration application to the RTO must have included the PAN of the buyer.

Also, GTO asks sellers to retain a copy of a "government issued photo ID card of the buyer" (though not specifically PAN):

https://www.team-bhp.com/forum/ownin...ml#post1411821
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Old 22nd June 2017, 08:38   #1153
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I do have the license copy, so I am pretty sure I am ok. I deposited all the cash in the bank account - actually I had the buyer do that; I wish now I had not done that because the deposit attracted the query after 8 years! The buyer was a dealer and must have resold the car because the new smart card he gave me for my record later is in the name of the final buyer.

Who perhaps needed to give his PAN for transferring the registration in his name; I have no idea.

I know that the RTO will not register a new car without a PAN card for many years now, and even in 2009. But I have no idea about transfer of registration, which, legally speaking is different from registration unless specifically stated. Does the RTO require a PAN card today for transfer of ownership?
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Old 22nd June 2017, 08:46   #1154
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You should have asked him to give you a cheque or neft the money rather than cash deposit

Such old returns are pulled for scrutiny mostly on tips / specific information so you will get asked for all sorts of things regardless of mandatory or not, up to you to convince the AO in your case
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Old 22nd June 2017, 09:10   #1155
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Yes, I will handle those now. But this is one reason why people prefer to just deal both legs of the transaction in cash, even today. Honest folk deposit the cash in the bank, the clever ones just use it for household expenses.

Given how the economy is going to tank now after the big bang demonetisation, I can't see this sterilisation method happening often in the medium term, so I would not be surprised to see things continuing in the old merry way with new notes.
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