By Chirag Nangia
During the financial year 2022-22, I earned less than Rs 75,000. In April 2021, I opened a demat account and started investing and trading. I have lost money in day trading. Do I have to file income tax returns?
Indian tax laws mandate furnishing return of income only when their gross total income in a financial year exceeds the basic exemption limit. The exemption limit for FY 2021-22 for one below 60 years of age is `2.5 lakh. However, set-off and carry-forward of losses are allowed only if the return of income/loss of the year in which loss is incurred is furnished on or before the due date of furnishing the return. Accordingly, even though your total income is below the basic exemption limit, in order to carry forward your losses and reduce your tax liability for subsequent assessment years, you must file a return. Since you have income from business and profession, you may declare income in ITR 3. Income from share trading and practicing law may be declared as business income and capital gains from investing in shares may be declared under ‘schedule CG’ of the ITR form.
I opted for the new tax structure and tax was deducted which is more than what it would have been if I opted for the old tax structure. Can I change to the old structure now?
Under the new concessional tax rate regime, individuals can offer their total income at lower slab rate prescribed, provided they forgo certain specified deductions and exemptions. This regime is optional and the option can be exercised in every tax year if the taxpayer does not have business or professional income. In the absence of information, it is assumed that you are a salaried employee, not having any income from business or profession. It has been clarified by the CBDT that intimation to employer declaring intention to opt for concessional tax regime shall only be for the purpose of TDS, which cannot be modified during the year. However, at the time of filing the return of income, one may switch to the old regime. Thus, options at the time of filing of return may be different from intimation made to the employer. The ITR Form asks the choice of the individual and tax is computed accordingly. The TDS in excess of the final tax liability (ascertained after taking into account the allowable deductions/ exemptions) can be claimed as refund by opting for the old regime in the ITR.
I sold some mutual funds units three months ago with capital gains. Which ITR should I file?
Since you have income under head’ Salary’ and Long term Capital Gain (LTCG), you have to use ITR 2. Further, capital gains arising from transfer of long term capital assets being equity shares/ or units of an equity-oriented fund, shall be taxed at the rate of 10% of such capital gains exceeding `1 lakh. Therefore, assuming that mutual funds are equity-oriented, LTCG over and above Rs 1 lakh shall be taxed at prescribed rate.
The writer is director, Nangia Andersen India. Send your queries to firstname.lastname@example.org