1. Income tax returns (ITR): On sale of houses in Mumbai, Pune, here is what you should know to avoid taxman

Income tax returns (ITR): On sale of houses in Mumbai, Pune, here is what you should know to avoid taxman

Investments made in the REC bonds from capital gains arising from sale of a long term capital asset during the financial year in which the original assets are sold and in the subsequent financial year should not exceed Rs 50 lakh.

Published: November 22, 2017 2:37 AM
Total investment under Section 54EC can’t exceed Rs 50 lakh in two consecutive years (PTI)

• I sold my house in Pune in September 2014. I invested Rs 50 lakh in Capital Gain Saving REC Bonds in Sept 2014. I also sold another house in Mumbai in December 2014 and invested Rs 50 lakh in Capital Gain Saving REC Bonds in April 2015 (within 180 days but in the next financial year). As the 2014 Budget disallowed investment over Rs 50 lakh in one financial year, the tax officer is disallowing the investment done in April 2015 and demanding tax. What should I do?
– Ashutosh Gupta

Exemption on specified REC bonds under Section 54EC has been amended with effect from financial year 2014-15. Investments made in the REC bonds from capital gains arising from sale of a long term capital asset during the financial year in which the original assets are sold and in the subsequent financial year should not exceed Rs 50 lakh. Since both the properties were sold during financial year 2014-15, total investment under Section 54EC cannot exceed Rs 50 lakh.

• How would I link my Aadhaar with my small savings schemes like NSC, KVP and PPF?
—Niraj Kumar

Aadhaar number can be linked with savings scheme by filling up an Aadhaar linking form available with banks. The Aadhaar linking form for post office savings scheme can be downloaded from www.indiapost.gov.in. The deadline to link Aadhaar with PPF, NSC and KVP is December 31, 2017.

• My National Savings Certificates matured in April this year and I earned Rs 60,000 as interest. The interest amount has still not been reflected in my form 26AS as the post office has not deducted any amount in tax. Should I still pay tax on the interest earned and how would I pay?
—Abhay Gupta

The interest on NSC is accounted every year as income from other sources and as the amount is reinvested, credit is taken for the reinvestment by way of deduction under Section 80C. As there will be no reinvestment in the last year of the scheme, deduction will not be available and interest for the year will need to be offered to tax. If interest accrued in the previous years has not been offered to tax on accrual basis, entire interest income will now be taxable on receipt basis, provided interest income exceeds the basic exemption limit. Further, as no taxes have been deducted at source, it is advisable to pay tax on advance tax method, provided the requirement to pay advance tax is applicable, else it can be discharged as self-assessment tax.

Shanmuga Prasad
The writer is tax director, People Advisory Services, EY India.

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