Income tax returns filing: How is TDS on deceased’s capital gains account to be reported

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October 02, 2017 2:56 AM

The CBDT has instructed the banks through a notification dated September 13, 2017 regarding deduction of tax at source (TDS) on interest on deposits made under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased.

Income tax returns filing, TDS on deceased's capital gains, capital gains, Capital Gains Deposit, Section 54, TDS, Capital Gains Accounts Scheme, TDS on interest income, cooperative housing society, ITATHere is how to get a report of TDS on deceased’s capital gains.

My father had sold a house property two years back and had invested the capital gain amount in the Capital Gains Deposit Account in order to avail the benefit of exemption under Section 54. As he has died, I want to know on whose name now TDS will be deducted on interest earned from such deposits, because if TDS continues to be deducted in the hands of my father, I will have difficulty in claiming the credit.
– Bhupinder Singh

Recently, the CBDT has instructed the banks through a notification dated September 13, 2017 regarding deduction of tax at source (TDS) on interest on deposits made under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased. According to this, in case of deposits under the Capital Gains Accounts Scheme, 1988 where the depositor has deceased:

(a) TDS on the interest income accrued for and up to the period of death of the depositor is required to be deducted and reported against PAN of the depositor, and

(b) TDS on the interest income accrued for the period after death of the depositor is required to be deducted and reported against PAN of the legal heir.

I am an individual and owner of a flat in a cooperative housing society. Society has gone under redevelopment. As per the agreement, developer paid corpus fund to all the flat owners as compensation. Will this receipt of corpus fund be taxable in the hands of flat owners?
—Avinash Kumar
The issue regarding the taxability of the corpus fund or a lump sum amount, received by the members under the agreement for redevelopment has been dealt by the Income tax Appellate Tribunal’s (ITAT) Mumbai bench in one of its decisions. The Tribunal held that amount received as corpus funds towards hardship caused to members on redevelopment was a capital receipt and was thus not taxable.

However, such receipt would be reduced from cost of acquisition of the new flat received under redevelopment agreement. Further, in the very same decision, the Tribunal held that receipt of rent for alternative accommodation shall be exempt to the extent it is utilised for payment of rent, because it is nothing but compensation received by member for paying rent.

The writer is the founder of RSM Astute Consulting Group. Send your queries to fepersonalfinance@expressindia.com

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