[Mnjdnght]

Originally Posted by blorebuddy

With multiple to and fro on the portal did not help. Called call center couple of times and one good soul helped me with the right process. I filed a rectification with offline correction option.

Certainly deserve kudos for cracking through IT support to get the issue resolved. How do you choose the offline correction option? Is it something that was done through your CA or were you able to do this yourself on the portal? It would be helpful to know the procedure since I am also awaiting resolution on a wrongful demand issue.

[blorebuddy]

Originally Posted by Mnjdnght

How do you choose the offline correction option? Is it something that was done through your CA or were you able to do this yourself on the portal?

You need to file a rectification request. Many steps can be referred from here

1. Go to ‘Services’ in the main menu and click on ‘Rectification’ in the drop down. Refer to this image
2. Click on the ‘New Request’ button. Refer to this image
3. Now select ‘Order passed under’ as ‘Income Tax’. Select the relevant assessment year from the dropdown for which rectification is to be filed and continue.Link
4. Choose the option - Return data correction(Offline) /Rectify return via return data correction XML/JSON Link
5. In the next page, you will be able to down load your submitted return in JSON format
6. Save this file in your local machine
7. Download offline utility for the respective AY
8. Login to the offline utility and choose the options to file revised return
9. You will go through the steps as if you will be revised return
10. In the step - Taxes paid section, add the taxes paid (in my case I have already paid the requested tax demand however it was not reflecting, they also deducted from this years refund amount ) hence I paid twice. Entered all these as in the FORM 26AS
11. Gone through the validation, till final step till so that all the validations complete and only verification was pending
12. Downloaded json
13. Now login online portal - repeat the steps from 1 to 5.
14. Upload JSON and enter the reason
15. Submit. You are done.

[sunnsood]

Dear members. Need your recommendation on the topic.

I am closing my currently running home loan.

Now is it advisable to buy a new property just to save tax? I fall under 30% tax bracket and I am unsure if I should Just invest for tax saving purposes. Everyone is talking of home loan benefits across the internet but no creditable articles are available that can ihelp me in deciding on the second home topic itself.

[mtripathi13]

Originally Posted by sunnsood

Now is it advisable to buy a new property just to save tax? I fall under 30% tax bracket and I am unsure if I should Just invest for tax saving purposes. Everyone is talking of home loan benefits across the internet but no creditable articles are available that can ihelp me in deciding on the second home topic itself.

Dear Sir,

Under the income tax Act, up to two properties can be treated as self-occupied. The ceiling limit of deductions/exemptions are applicable in totality and not for each individual property separately.

As you must already be aware, the principal repayment of housing loan forms part of 80C, provided the house is not transferred within five years of possession. This ceiling limit of 80C is Rs1.50 lacs.

Further interest element of the loan is allowed up to 2 lacs for each owner in respect of self occupied property and unlimited amount for rented property.

As you are under 30% bracket you can easily calculate the tax impact, in either of the cases i.e. self occupied or rental use case and take a call accordingly.

Sir, there are two school of thoughts regarding the purchase of property for rental income/capital appreciation. One school is the conservative one and based on their social conditioning, they opine that a buying a second property gives peace of mind and prepares for any untoward eventualities later on in life.

The second school of thought, is the more modern and aggressive- return oriented and according to them investing in property should only be done if the rental yield and future capital appreciations is more than the opportunity cost of capital invested in the property.

Both of these concepts have their reasoning sorted. It all depends on the individual and his/her financial outlook.

Further one can either buy a flat, a house with land, a commercial space or freehold land with the capital.

Flats will be the least appreciative, as with time the flat also ages and the current market rate can never be realized from an old flat. Cities like Mumbai might be an exception but mostly this is true. Again, redevelopment of old flats and complexes is a hassle. However, it is far easier to keep the possession in control and ensure safety for a flat.

Individual houses are better as selling them is far easier because they come with the land. Commercial spaces at good locales are also readily convertible in cash.

Land is the asset which will give the maximum return but it has the highest risk. It is really a task to keep it holding for long period without the risk of encroachment and attempted illegal possession.

Accordingly, please take into consideration the above factors.

If you are fine with increased tax pay out and are an avid learner and investor, my personal opinion is to invest the funds in a diverse way including and not limited to bullion, debt funds, g-secs and equity market. All these with a long- term horizon shall definitely yield more than a property.

Please note that this is just my opinion and other people may have their reasoned opinion on the same.

[vsrivatsa]

Originally Posted by mtripathi13

Further interest element of the loan is allowed up to 2 lacs for each owner in respect of self occupied property and unlimited amount for rented property.

The rented property being unlimited amount is a little tricky though.

"The additional benefit of renting out the property is that you can carry forward extra loss. You can mention whole amount of Rs.5 las as interest u/s 24. Out of this only Rs.2 lac will be allowed as deduction & you can carry forward excess interest of Rs.3 lac for next 8 AY’s. While in case of self-occupied property, this loss will lapse." - from tax2win (URL)

[mtripathi13]

Originally Posted by vsrivatsa

The rented property being unlimited amount is a little tricky though.

Sire, as a professional, let me tell you, that nothing is short and simple in Income Tax. I did not expound the ‘unlimited’ part as that could have made the post longer and more complex.

Now that you have touched upon the point, let me deep dive in the details for the benefit of our other readers.

Section 24(b) of the Act, deals with borrowed capital. The various provisos of the subsection limits the total deduction for a self- occupied property (SoP) to Rs.2 lacs. This subsection is silent on limit with respect to let-out property (LoP).

What follows literally and logically is that, there is no ceiling limit on deduction u/s 24(b) in case of LoP. So if interest on borrowed capital on LoP is say Rs. 3 lacs, the entire amount is allowed as deduction u/s 24(b) from the Annual value/Rent received. What also follows is that in case there is loss after such deduction, the loss is liable to adjusted with other heads during the same year, as per section 71. Further any unadjusted losses are carried forward as per section 71B.

Now this position remained true till Finance Act,2017 which led to a certain twist in the tale. The said Act, w.e.f the financial year starting on April 1,2017 (relevant to A.Y.2018-19), restricted this inter-head adjustment during the same year to Rs. 2 lacs only. The rest of the amount had to be carried forward as per section 71B.

So, the position now is as follows:

SoP- Ceiling of deduction-2 lacs, Ceiling of set-off – 2 lacs
LoP-Ceiling of deduction-Not Applicable, Ceiling of set-off-2lacs, Rest C/F

One more thing is to be noted that carry forward of losses is also available to SoP. Say the deduction is Rs 1.90 lacs for a SoP. Other Income say is Rs 1.80 lacs. In that case the difference of Rs.0.10 lacs is also allowable to be carried forward u/s 71B.

Kindly note that once a loss is c/f it is only adjusted with the same head in the subsequent years.

I hope the above information is useful to members.

Warm Regards
Manish

[mtripathi13]

Originally Posted by mtripathi13

Section 24(b) of the Act, deals with borrowed capital.

Kindly note that section 24(b) deals with interest on borrowed capital and not with 'borrowed capital'. The error is regretted.

[Habanero City]

Hi Manish,

Thanks for the earlier help.
I have a question for you as follows:

My daughter has 2 salary income for June 2022 from 2 different employers as she shifted from one company to another.

Both the employers did not deduct tax (TDS) for the income paid for the month of June 2022.
It appears in the Form 26AS (updated to December 2022), and the TDS is still not done.
What should we do?

The first employer does not have any other payments to deduct TDS.
Now should we estimate the tax on this salary income (for June 2022) and pay advance tax by 15th December to avoid interest and penalty?

Thanks in advance

[SLK]

Originally Posted by Habanero City

The first employer does not have any other payments to deduct TDS.
Now should we estimate the tax on this salary income (for June 2022) and pay advance tax by 15th December to avoid interest and penalty?

I don't think advance tax is applicable on salary income. Sometimes these mismatches occur but no advance tax is applicable.

Normally, the second employer will make good the shortfall in subsequent months. As a part of investment/ income declaration the employers take salary from previous employer also in account and then computes tax for the year and spreads over the year as TDS. Monthly timing is irrelevant.

I've sometimes changed my salary structures/ investments at the end of the year and paid 50% salaries in tax in Feb/Mar.

If at end of year, total tax is still short deducted, please pay self assessment tax before 31 March 23.

I'm not the most updated with tax laws, but this should be ok.

[mtripathi13]

Originally Posted by Habanero City

Hi Manish,

What should we do?

Thanks in advance

Hello Sir, one way is to submit declaration to current employer with the details of income from earlier employer and ask them to consider the same in calculation of tds in the remaining months of the f. Y. This will entail an increase in tds amount in the remaining months of the f. Y.

If this does not happen for some reason, you are free to deposit tax on your own. The aim should be to pay off the entire potential tax liability before the end of the f. Y.

Regards
Manish

[thanixravindran]

Originally Posted by mtripathi13

Regards
Manish

Hello Manish - Will you be able to help clarifying the tax deduction of multi year health insurance policy premium under 80D?

I paid premium for 3 year health insurance policy in July 2022 for policy from July 22 to July 25 ( 3 years). I was under the impression I can claim 80D for 3 years at pro rata basis equally. For each year it will be within 25000 limit only.

When I submitted in my office, they came back that under 80D, it is 1+policy years which means 4 years and GST is excluded. I read the income tax website and it talks about previous year but starts from the premium paid year. I couldn't find any reference for GST exclusion.

Kindly clarify, if possible.

[mtripathi13]

Originally Posted by thanixravindran

I paid premium for 3 year health insurance policy in July 2022 for policy from July 22 to July 25 ( 3 years). I was under the impression I can claim 80D for 3 years at pro rata basis equally. For each year it will be within 25000 limit only.

When I submitted in my office, they came back that under 80D, it is 1+policy years which means 4 years and GST is excluded. I read the income tax website and it talks about previous year but starts from the premium paid year. I couldn't find any reference for GST exclusion.

Dear Sir,

The provisions enabling payment of medical insurance premiums for multiple years was brought in by the Finance Act,2018 by virtue of insertion of sub-section (4A) and it was applicable from financial year 2018-19 or assessment year 2019-20. The said section is reproduced below:

(4A) Where the amount specified in clause (a) or clause (b) of sub-section (2) or clause (a) of sub-section (3) is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of any person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous year, a deduction equal to the appropriate fraction of the amount.

Explanation. —For the purposes of this sub-section, —

(i) "appropriate fraction" means the fraction, the numerator of which is one and the denominator of which is the total number of relevant previous years;
(ii) "relevant previous year" means the previous year beginning with the previous year in which such amount is paid and the subsequent previous year or years during which the insurance shall have effect or be in force.'

As is evident, the deduction is allowable equal to appropriate fraction of the amount paid. There are Four previous/financial years involved in your case. 1) July 2022 till March, 2023.2) April 2023 till March 2024. 3) April 2024 till March 2025. 4) April 2025 till June 2025. The amount shall be proportionally divided based on the number of days. This is the intent of the law.

Secondly, section 80D(1) allows as deduction of ‘such sum’ which has been paid by an assessee in the mode specified in sub-section (2B) in the previous year out of his income chargeable to tax.

Such sum as specified means the actual amount paid (inclusive of gst) and on plain reading of the section is clear that the entire sum is allowable. So the exclusion of gst, in my opinion is not tenable in law.
Hope the above clarifies the position.

Regards
Manish

[Hatari]

Gents,

Need a little help.

I have a market linked pension policy due to expire in 2 years. I wanted to end it now and cash out.
Is there a large tax implication I need to consider?.. if yes, if there any other smart way going about things?

[mtripathi13]

Originally Posted by Hatari

I have a market linked pension policy due to expire in 2 years. I wanted to end it now and cash out.
Is there a large tax implication I need to consider?.. if yes, if there any other smart way going about things?

Sir, assuming that the pension policy is from an IRDA approved insurer, please try to commute as much portion as possible. Commuted pension is completely exempt from an approved insurer/fund. The monthly or yearly annuity, if chosen, is taxable at all times for all and sundry.

For the benefit of our other readers, I will be a little more non-technical. Commutation of pension means getting some portion as lumpsum.

Regards
Manish

[Hatari]

Originally Posted by mtripathi13

Sir, assuming that the pension policy is from an IRDA approved insurer, please try to commute as much portion as possible. Commuted pension is completely exempt from an approved insurer/fund. The monthly or yearly annuity, if chosen, is taxable at all times for all and sundry.

For the benefit of our other readers, I will be a little more non-technical. Commutation of pension means getting some portion as lumpsum.

Regards
Manish

Thanks for your reply Manish.

It is IRDA approved.

Is the % commutation (of the current NAV) at the discretion of the Insurer or Income Tax laws please? And which section would this be tax free under? Also would it be Net gain after deducting value of of the Annual premiums I have paid?