I have got a tax notice due to a mismatch in my income tax return (ITR) and annual information statement (AIS). There was an entry of interest income in AIS which was not there at the time of filing the return in July. What should I do?
—Arvind Iyer
A mismatch between your ITR and AIS is common, as banks and institutions often update data later. The AIS interest entry should be checked against your bank statements or Form 26AS. If the AIS amount is correct and the income was missed, a revised return can be filed on or before December 31, 2025, with the applicable tax and interest, if any. Notably, if the entry is incorrect, feedback can be submitted on the AIS portal by marking it as a mismatch or not related to you. Responding to the notice on time with supporting documents resolves the matter smoothly.
Paying advance tax
Apart from salary, I earn rental income. Should I pay advance tax in December or wait till March next year?
—Kushal Singh
Advance tax becomes payable when your total tax liability, after deducting TDS and TCS, exceeds Rs 10,000. Once this threshold is crossed, you are required to pay advance tax in four instalments (15th June, 15th September, 15th December, and 15th March). If you pay advance tax in March, it will attract interest under Sections 234B and 234C. To avoid such interest implications, it is advisable to pay the advance tax by the December due date, i.e., 15th December.
Transferring mutual funds
If I transfer some units of mutual funds to my brother, do I have to pay tax on it? —Ajit Puri
The transfer of a capital asset by way of a gift to a brother is not regarded as a “transfer” for tax purposes and does not trigger capital gains. The tax will apply only when your brother sells the units. He will use your original cost and your original holding period to compute the gain. You may still need to maintain proper documentation, such as a gift deed, to support the genuineness of the transfer.
I got Rs 5 lakh from unit-linked insurance plan (Ulip). Do I have to pay tax on the gains of Rs 2 lakh?
—Saurab Kamat
For Ulips issued before February 1, 2021, the maturity amount is fully exempt under Section 10(10D) if the annual premium does not exceed 10% of the sum assured. For ULIPs issued on or after February 1, 2021, the maturity proceeds are taxable as capital gains (12.5% on excess of Rs 1.25 lakh) if the annual premium exceeds Rs 2.5 lakh or if it exceeds 10% of the sum assured during the term. Else, the exemption under Section 10(10D) continues to apply.
The writer is tax partner, AKM Global, a tax and consulting firm. Send your queries to fepersonalfinance@expressindia.com