[Mahesh Babu]

I am planning to shift money from my NPS Tier 2 to Tier 1 for availing tax benefits. Is it considered as a sale of units and do I have to pay capital gains tax on difference of cost of Tier 2 units at the time of purchase and transfer to Tier 1? Similarly what would the tax liability be on switching my scheme preference in NPS?

[sukhoi]

Originally Posted by dragonfire

I have a few SIPs and last year my portfolio manager sold them and bought them again cos he moved from his solo practice to a registered company. I didn't know that until I saw the AIS statement. I have already filed my IT returns, but had failed to include them in the return.

Now, I thought I'd file a revised return, but calculating capital gains seems so complex. First of all, how do I determine the purchase price? Cos SIPs are bought monthly. And some of them fall under long term and some under short term. The AIS statement also shows the purchases made. Can I claim an exemption similar to property sales where you can claim exemption if you used the proceeds to buy another property?

Or since I have already filed, should I wait for a demand from IT department? It would be easy for me if they compute and send a demand letter and I can just pay the amount + fine and get away with not doing the complex math.

I would recommend filing a revised return, even though it would involve some extra work. Main reason being that I am not sure what would be the penalty amount + interest and whether there would be any other overheads in terms of responding to the notice from the department. As for the purchase prices and other details, your portfolio manager should be able to provide it or you could check in AIS. I do not invest actively in mutual funds so am not sure but CAMS might be able to provide some information as well. I think there was some mention about CAMS and KFinTech in this thread about how to get transaction details from it. Last date for filing a belated return or revised return for FY 2020-21 is 31-March-2022 (source article) so you have sufficient time to do this over a weekend or two.


Needed help on tax filing returns for my sister. Some background, she has been working as a social media influencer / digital content creator and also started a small home baking business in last financial year. So broadly, her sources of income are as below:
1) Income from blogging (putting up posts on Instagram which are paid posts or collaborations)
2) Income through partnering with social media platforms which have a contract for N months and a monthly payout. As part of these photo and video content is prepared and posted on relevant platform
3) Income as a baker by selling baked products like brownies, cakes and cookies
4) Income from affiliate marketing, the least amount of the lot

Gross total income from all these sources combined is in 2.5 ~ 3 lakh bracket, making her eligible to file returns. After deductions and exemptions, she would not have to pay any tax. However we want to ensure that we file the returns using the correct form and sections to avoid any confusions/notice later on.

Since the above sources of income are under head business, ITR 4 is what I am planning to go with however had a few queries:

1) We did not maintain a proper book of accounts (very small business and were not aware of the concept of book-keeping, only have a high level list of sales and expenses) hence ITR 4 (presumptive taxation) sounded like a good option. While we loose out on claiming expenses, the minimum is 8% (for cash receipts) & 6% (for digital payments) so we can choose a reasonable amount after accounting for basic expenses (raw material for baking needs) and show income to be subject to tax.

2) ITR 4 says that it cannot be used for commission or brokerage income like insurance agents or real estate brokers (they have to use ITR 3 which is a more complex form based on whatever little I read about it). Does affiliate marketing fall under commission income is where I am confused. Depending on who I read online or watch on YouTube, it is either ways. One person on YouTube has even recommended to show it as Income from other Sources since it is a small amount (in the case he was demonstrating). The affiliate partner has deducted tax under 194C (which states that any individual making a fee to a residential individual, who carries out 'work' as a contract between the 'specified individual' and the 'resident contractor,' is obliged and required to deduct TDS). Section 194D on the other hand seems more like the commission income thingy. Based on the above descriptions I am thinking that affiliate marketing can be marked as advertising business (as mentioned in the linked article) and shown under business. This allows us to go with ITR 4, keeping things simple

3) None of the sources of income for her fall under the head Profession, based on business codes earmarked for profession. Initially I could not find the clear demarcation of business versus profession but then came across this pdf which lists out the various codes for business and profession for AY 2021-2022. This demarcation is important because under Presumptive Taxation scheme, professionals have to show minimum 50% of their turnover as taxable income, which is higher than what businesses have to show (8% or 6%, for cash and digital payments respectively). Could not find the rationale behind this huge difference in minimum income as percentage in case of business vs professionals. In case any one knows, please share.

Social media being a relatively new space in terms of revenue stream, I have not much idea about it and the above is what I could figure out. Any help or inputs would be appreciated.

Regards,
S
PS: For quick reference, in case it helps anyone, profession codes are Software development (14001), Other software consultancy (14002), Data processing (14003), Database activities and distribution of electronic content (14004), Other IT enabled services (14005), BPO services (14006), Maintenance and repair of office, accounting and computing machinery (14008), Legal profession (16001), Accounting, book‐keeping and auditing profession (16002), Tax consultancy (16003), Architectural profession (16004), Engineering and technical consultancy (16005), Fashion designing (16007), Interior decoration (16008), Photography (16009), Business and management consultancy activities (16013), Secretarial activities (16018), Medical Profession (16019_1), Film Artist (16020), General hospitals (18001), Speciality and super speciality hospitals (18002), Nursing homes (18003), Diagnostic centres (18004), Pathological laboratories (18005), Medical clinics (18010), Dental practice (18011), Ayurveda practice (18012), Unani practice (18013), Homeopathy practice (18014), Nurses, physiotherapists or other para‐medical practitioners (18015), Veterinary hospitals and practice (18016), Medical education (18017), Medical research (18018), Practice of other alternative medicine (18019), Other healthcare services (18020), Individual artists excluding authors (20010), Literary activities (20011), Other cultural activities n.e.c. (20012).

[binand]

Filed my ITR yesterday. Schedule CG is a nightmare. I can totally see why so many of our last few pages of queries has been about this schedule.

[dailydriver]

Originally Posted by binand

Filed my ITR yesterday. Schedule CG is a nightmare. I can totally see why so many of our last few pages of queries has been about this schedule.

Birds of the same feather we are .

I am almost certain that whoever designed the site and gave it the final go ahead has never ever really filed a return by himself independently.

I used to be part of at least a dozen e filings annually, helping friends, colleagues and family members get through the process. This year, I have restricted my services only to the immediate family: despatching the rest towards gleeful auditors/TRPs.

I suspect that the new portal is one way government is ensuring employment generation in the virus damaged economy .

[sidg]

Originally Posted by sukhoi

professionals have to show minimum 50% of their turnover as taxable income, which is higher than what businesses have to show (8% or 6%, for cash and digital payments respectively). Could not find the rationale behind this huge difference in minimum income as percentage in case of business vs professionals. In case any one knows, please share.

This is because in a product oriented business, profit margins are nearly 5-10%. Whereas in service industry, profit margins are nearly 50%. Hence, Income tax department to encourage more number of people to file income tax returns whose turnover is less than 2 cr, brought this scheme of presumuptive taxation.

Regarding point no.2, TDS deduction u/s 194C is for work and not commission. For Commission, it would have been deducted u/s 194H. Hence, I think you can file ITR4.

Originally Posted by Mahesh Babu

I am planning to shift money from my NPS Tier 2 to Tier 1 for availing tax benefits. Is it considered as a sale of units and do I have to pay capital gains tax on difference of cost of Tier 2 units at the time of purchase and transfer to Tier 1? Similarly what would the tax liability be on switching my scheme preference in NPS?

You may refer to the following link. It most likely will fall under capital gain tax due to linked with NAV and lack of clarity on taxation in tier II withdrawals.

https://www.livemint.com/money/perso...265047081.html

[vharihar]

Originally Posted by binand

Filed my ITR yesterday. Schedule CG is a nightmare. I can totally see why so many of our last few pages of queries has been about this schedule.

Switch to Cleartax, my friend! It's way too easy. And it's free. And it's a govt approved intermediary.

The biggest advantage I've found in intermediaries like Cleartax, TaxSmile, etc over filing directly at the IT website, is that the questions in these intermediaries is put forth in very layman terms, like your friend is sitting next to you and interviewing you in plain, simple English without you having to knows the nitty gritty details of the IT rules/sections/etc, and this makes it very easy to go through the filing process.

[binand]

Originally Posted by vharihar

Switch to Cleartax, my friend! It's way too easy. And it's free. And it's a govt approved intermediary.

The problem schedule was Schedule CG and all the ones that feed into it - 112A & BFLA - and the level of detail required therein.

Take out a statement of all the sells in the FY from DP, locate corresponding buys, watch out for grandfathering, determine ST or LT based on days elapsed, identify time period to book the CG/CL, account for BFLA, account for transaction costs, arrive at the CG amount for each period. I don't think Cleartax or any such service makes this process simple.

That time period thingy has to be done multiple times. ST/LT, Stocks/MF, Sale and Dividend (which goes in schedule OS).

Oh, at the end of it make sure everything matches with the AIS.

I have attempted to use Cleartax couple of times in the past - but their extreme dilution itself was detrimental for me. I always end up ditching them and going back to the "official" tools. Plus being private companies I am slightly skeptical of giving them the ITR kind of access to my personal finance information.

Edit: Actually this process is becoming more and more complicated and time consuming with each passing year that soon I will have to bite the bullet and go the CA way.

[vharihar]

Originally Posted by binand

The problem schedule was Schedule CG and all the ones that feed into it - 112A & BFLA - and the level of detail required therein.

Take out a statement of all the sells in the FY from DP, locate corresponding buys, watch out for grandfathering, determine ST or LT based on days elapsed, identify time period to book the CG/CL, account for BFLA, account for transaction costs, arrive at the CG amount for each period. I don't think Cleartax or any such service makes this process simple.

That time period thingy has to be done multiple times. ST/LT, Stocks/MF, Sale and Dividend (which goes in schedule OS).

Oh, at the end of it make sure everything matches with the AIS.

I have attempted to use Cleartax couple of times in the past - but their extreme dilution itself was detrimental for me. I always end up ditching them and going back to the "official" tools. Plus being private companies I am slightly skeptical of giving them the ITR kind of access to my personal finance information.

Edit: Actually this process is becoming more and more complicated and time consuming with each passing year that soon I will have to bite the bullet and go the CA way.

Well, it's your data, so you gotta gather it :-)

But feeding it all into the system is where Cleartax etc makes it easier (only a bit easier for CG, but significant easier for non-CG stuff). Even with grandfathering, etc rules (it asks those dates; which, well, we gotta gather, whether we use a CA or Cleartax or IT website). CG is painful, but the best one can do to mitigate it is to use the capital gains report of your brokerage.

Cleartax etc provide a XLS download/upload too. Still a pain, but hey, filing taxes was never meant to be easy :-).

In my opinion, an overwhelming bulk of the work is in gathering the data, so it saves me nothing to use a CA. Besides, I've had cases where CA messed it up. And if I've got to eyeball it to cross check CA's work, then why use a CA at all!

[jkrishnakj]

For the first time in my working life, I’ve gone to a CA for help to file my returns. It’s got a little complicated for me this year with a move in job, interest’s, capital gains etc. Didn’t want to break my head during this holiday season.

[kochup]

Quick query.

Filed my return using the Online utility, I had to pay Rs 270 extra as per the utility which i paid using the link provided within the same, however was not able to upload the challan details of the Self Assessment Tax which i paid (as I did not see any option), due to this my return acknowledgement currently shows as Rs 270 as pending amount to IT Dept.

Wanted to check what should be my next course of action -

a) Should i file a revised return which includes the Challan details (need to fill in all the details again as the draft is no more showing up) (or)
b) when the demand comes from IT Dept, should i just upload the challan details of the payment.

Thanks in advance.

[sidg]

Originally Posted by kochup

Quick query.

a) Should i file a revised return which includes the Challan details (need to fill in all the details again as the draft is no more showing up) (or)
b) when the demand comes from IT Dept, should i just upload the challan details of the payment.

Do not wait for the demand notice to be issued. File revised return immediately. You can add self assessment challan in tax payment ->Details of payments of advance tax and self assessement tax tab. Do not ever file ITR without uploading tax paid challan details.

[hondafanboy]

Originally Posted by kavu75

It's same scenario in my case too. I filed my ITR2 on October 15th (paid additional taxes due and e-verified) and for my wife also.
The status on the portal shows under processing on 17th on-wards.

Hi,
Just checking to see if yours got processed yet. Mine's is still not.

[kavu75]

Originally Posted by hondafanboy

Hi,
Just checking to see if yours got processed yet. Mine's is still not.

It's not processed yet, shows "Under Processing" for both of us. Same status from 17th October.

[sukhoi]

Originally Posted by sidg

This is because in a product oriented business, profit margins are nearly 5-10%. Whereas in service industry, profit margins are nearly 50%. Hence, Income tax department to encourage more number of people to file income tax returns whose turnover is less than 2 cr, brought this scheme of presumuptive taxation.

Regarding point no.2, TDS deduction u/s 194C is for work and not commission. For Commission, it would have been deducted u/s 194H. Hence, I think you can file ITR4.

Thanks for the confirmation sidg. Will go ahead with ITR 4. After reading the description for 194C I also felt it is contract work however since it is affiliate marketing and that is referred to as commission based income by many on YouTube I was confused.

Originally Posted by binand

I have attempted to use Cleartax couple of times in the past - but their extreme dilution itself was detrimental for me. I always end up ditching them and going back to the "official" tools. Plus being private companies I am slightly skeptical of giving them the ITR kind of access to my personal finance information.

While I have never used cleartax, one of the reasons for staying away from such sites is the same as you have mentioned, giving them access to personal finance information. Am yet to file my return (ITR 2) for AY 2021-22 so would reserve judgement on the new portal and experience, but till previous year my experience with filing returns has been relatively smooth.

Originally Posted by vharihar

Well, it's your data, so you gotta gather it :-)

True that. And that data gathering is taking time for me for dividend income, checking whether everything is captured correctly in AIS or not, verifying whether for the right scenarios TDS of 7.5% was deducted or not, calculating the actual dividend and then distributing it quarter wise. In case of another family members AIS, the dividend information was missing 2 entries, not sure why since these 2 shares are also held in the same demat account. Am going to start preparing a spreadsheet to capture this information going forward, as and when a dividend is received, to avoid the last minute scramble for putting it all together.

Originally Posted by vharihar

In my opinion, an overwhelming bulk of the work is in gathering the data, so it saves me nothing to use a CA. Besides, I've had cases where CA messed it up. And if I've got to eyeball it to cross check CA's work, then why use a CA at all!

I feel we may need the help of a CA wherein we have some complex return processing or maybe a notice from income tax. But for majority of cases wherein income is salary and/or interest income and/or capital gains and/or dividend then we are able to file returns myself. Have been doing returns myself for self and family members for some time now since they were in the above scenarios which are relatively straight forward. Hopefully the portal issues would get sorted out soon and next year we would have a better experience of it.

Originally Posted by kochup

Quick query.
a) Should i file a revised return which includes the Challan details (need to fill in all the details again as the draft is no more showing up) (or)
b) when the demand comes from IT Dept, should i just upload the challan details of the payment.

Originally Posted by sidg

Do not wait for the demand notice to be issued. File revised return immediately. You can add self assessment challan in tax payment ->Details of payments of advance tax and self assessement tax tab. Do not ever file ITR without uploading tax paid challan details.

Would second what sidg has said. Please file a revised return. For revised return the last date is 31-March-2022 so you could wait for the next 2 days to let the rush get over and then do it. But do it on your own without waiting for notice.

Regards,
S

[binand]

Originally Posted by sukhoi

Am yet to file my return (ITR 2) for AY 2021-22 so would reserve judgement on the new portal and experience, but till previous year my experience with filing returns has been relatively smooth.

Oh this new monstrosity of infosysian proportions is a complete disaster. There are functional bugs (which to their credit, I see they notice and fix every so often), and also hugely irritating UX bloopers - like, inability to paste a number from clipboard if it contains commas, highly crippled keyboard navigation, the terrible pause-resume UX etc.