Income Tax Return: Along with tax on gains, software compatibility issues bother equity, MF investors

Filing their return of income has become a daunting task for the equity mutual fund investors investing especially through the SIP route.

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The 112A page in the ITR Forms (except ITR 1 and ITR 4) demands investment related details against every redemption.

Following the introduction of Section 112A, after the long-term capital gain (LTCG) on equity is made taxable, apart from paying 10 per cent tax on such gains over Rs 1 lakh in a financial year, filing the Income Tax Return (ITR) has become a headache for the equity and equity-oriented mutual fund (MF) investors.

As the 112A page in the ITR Forms (except ITR 1 and ITR 4) demands investment related details against every redemption, filing the return of income has become a daunting task for the investors investing especially through the SIP (systematic investment plan) route.

This is because, in case an investor having monthly SIP in 10 equity-oriented MF schemes for the last 11 years redeems all the investments in a financial year, except the last year’s investments, the gains on the investments for the 10 previous years – i.e. 120 installments for each funds and a total 1,200 installments for the 10 funds – will become LTCG.

So, while filing the return of income, the investor has to make entries in at least seven columns in all the 1,200 rows in the 112A page in the eligible ITR Form.

There are two options for the taxpayers to enter the details while filing the return online – either entering the details one by one by selecting the “Add More” option and saving each entry, or downloading the Schedule 112A spreadsheet in CSV format.

https://www.financialexpress.com/money/income-tax/getting-dividend-as-regular-income-beware-you-have-to-pay-tax-and-reveal-it-in-itr-this-year/2375475/

While filling the downloaded Schedule 112A spreadsheet in CSV format and uploading it is easier and time saving, it is not compatible with MS Office 2007 and older versions.

So, paying 10 per cent tax on gains in excess of Rs 1 lakh made on redemption of equity, equity-oriented schemes in a financial year is not enough, such investors either need to toil with the Schedule 112A to make each entry while filing their return of income, or have to update their software to make it compatible with the ITR format to use Schedule 112A spreadsheet in CSV format.

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