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Hardik

Hardik Parikh

Tax, Mutual Fund Expert 

106 Answers | 21 Followers

Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He also holds an MBA degree from IIM-Indore.
Hardik, who began his career as an equity research analyst, founded his own advisory firm, Hardik Parikh Associates LLP, which provides a variety of financial services to clients.
He is committed to sharing his knowledge and helping others learn more about finance. He also speaks about valuation at different forums, such as study groups of the Western India Regional Council of Chartered Accountants.... more

Answered on Aug 31, 2023

Asked by Anonymous - Aug 23, 2023
Money
Hi I had used the services of ClearTax to file my tax returns for the financial year 2021-22. ClearTax had appointed a CA to be by point of contact and to file my taxes. Everything was going smooth and they had sent me the final filings (ITR-3) for me to approve and pay off the tax. I paid the tax and gave the go ahead to file my returns. They filed my returns on 31st July2022 and then I noticed by mistake the CA had filled someone else's returns (ITR - 1) with all wrong numbers also using in the old tax regime. I immediately got his attention and he said that it was busy time and by mistake he attached someone else's filings to mine. He immediately corrected the mistake on 2nd August and filed mine with the right details. I asked him multiple times if it will be a problem to which he clearly said nothing to worry. Fast-forward to February 2023 and I got a notice from IT department that since I had submitted my filings in old tax regime as on 31st July I have pay 85K + additional tax. I have taken up to the clear tax team and they are making us run around in circles. Now the latest is the clear tax team has filled a grievance with the AO. My questions is any chance that it will be reversed as along clear tax team has been saying its not our fault don't worry everything will be ok. They are just making us run around. Do you think I will get my money back
Ans: Dear Anonymous,

I understand your concern and the stress that such situations can cause. Mistakes in tax filings can have repercussions, and it's essential to address them promptly.

Regarding the notice from the IT department, the fact that you've received a notice means that the department has identified a discrepancy in your filings. The grievance filed with the Assessing Officer (AO) by ClearTax is a step in the right direction. The AO is responsible for assessing and reassessing income, and they have the authority to rectify any mistakes.

Given that you have evidence of the mistake and its rectification, there's a good chance that the AO will consider your grievance. However, the process might take some time, and there's no guarantee of the outcome. It's essential to keep all communication and documentation related to this issue handy.

As for getting your money back, if the AO acknowledges the mistake and rectifies it, you might be eligible for a refund. However, if the AO determines that the tax is rightfully due, you might have to pay the amount.

I hope this situation gets resolved in your favor soon. Remember, it's essential to stay proactive and keep pushing for a resolution.

Warm regards.
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Answered on Aug 22, 2023

Asked by Anonymous - Aug 21, 2023
Money
I work for a private company with annual CTC of Rs 17.6 lakh, What are the investments which I must do in order to save the tax, Currently I have 4 Life Insurance policies with premium Rs 1 lakh Senior Citizen health insurance of Rs 25k I have a 3 year old daughter, this year I m planning for Sukhanya Samruddhi of Rs 1.5 lakh
Ans: Hi,

Given your annual CTC of Rs 17.6 lakh and your current investments, here are some tax-saving investment options you can consider for the financial year 2023-24:

1. Equity Linked Savings Scheme (ELSS): This is a type of mutual fund that not only helps you save tax but also gives you an opportunity to grow your money. They have a lock-in period of 3 years.

2. Public Provident Fund (PPF): You've mentioned planning for Sukanya Samriddhi for your daughter, which is a great choice. In addition to that, you can also consider investing in PPF. It's a long-term investment option that offers tax-free interest.

3. Unit Linked Insurance Plan (ULIP): Since you already have life insurance policies, you might want to look into ULIPs. They offer both insurance and investment under a single integrated plan.

4. National Savings Certificate: This is another safe investment option that you can consider.

5. New Pension Scheme (NPS): It's a voluntary, long-term retirement savings scheme designed to enable systematic savings. It is a mix of equity, fixed deposits, corporate bonds, liquid funds, and government funds.

6. Fixed Deposits: Some fixed deposits offer tax-saving benefits. However, the interest earned might be taxable.

7. Senior Citizen Saving Scheme (SCSS): Since you've mentioned senior citizen health insurance, if you or your family members qualify, SCSS can be a good option. It offers a good interest rate.

Remember, the key is to diversify your investments and not put all your money into one basket. It's also essential to keep in mind the lock-in periods, returns, and tax implications of each investment option.

I hope this helps!
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Answered on Jul 29, 2023

Money
Hello Sir I am 70 years old and retired my daughter stays in the USA. I was thinking of buying a small apartment there and also open a bank account there to send money once a year for my expenses. As a resident indian, am I allowed to do so and if it is legal what is the proceedure regarding government permissions ??? Thank you Sir
Ans: Hello Willy,

Absolutely, as an Indian resident, you can indeed buy a property in the USA and open a bank account there. The Reserve Bank of India (RBI) allows Indian residents to remit funds abroad for the purchase of immovable properties under the Liberalised Remittance Scheme (LRS).

Under the LRS, an individual can remit up to USD 250,000 per financial year for any permitted current or capital account transactions or a combination of both. This limit would cover your property purchase as well as other expenses.

For opening a bank account, you may need to visit the bank in person in the USA. However, some banks might allow you to open an account online or via correspondence. You would need to check with the specific bank for their procedures.

Please note that while the RBI does not require you to seek its permission for such transactions under the LRS, you would need to adhere to the rules of the Income Tax Act in India. Any income from the property, such as rental income, would be taxable in India. Also, you would need to include the property in your wealth tax returns in India.

I would recommend consulting with a tax advisor or chartered accountant to understand the tax implications in detail.

I hope this information is helpful.
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Answered on Jul 29, 2023

Money
Good Day Sir Parikh Sir, I am 47 years old and I am having FDR in three / four banks on which presently no TDS is being deducted by the banks as the interest income is under Rs.40000/- in each bank. I want to get the TDS deducted @ 10% by the bank on my FDR income even if the interest amount is below Rs.40000/- The banks are mentioning that the Computer system does not deduct TDS below Rs.40K. Sir, can you guide any Rules / Procedure so that the banks may be intimated through a letter to deduct at least 10% TDS on my FDR income. This will help me for not depositing TDS from my Saving account and the same is deducted from the interest income earned on FDRs. Kindly guide how can I get my TDS deducted on FDRs below certain exemption limit as per Govt. policy
Ans: Hello Amit,

I understand your concern and it's great to see your proactive approach towards tax compliance.

As per the Income Tax Act, banks are required to deduct TDS on interest income when it exceeds Rs. 40,000 in a financial year (Rs. 50,000 for senior citizens). This is an automated process and banks follow this rule strictly.

However, if you wish to have TDS deducted even when your interest income is below Rs. 40,000, you may not be able to do so through the bank directly as their systems are designed to comply with the existing tax laws and automatically deduct TDS only when the interest income crosses the specified threshold.

That being said, you can still manage your tax liability effectively. You can calculate the tax on your interest income and pay it as Self Assessment Tax or Advance Tax, as applicable, through the Income Tax Department's e-payment facility. This way, you can ensure that your tax payment obligations are met in a timely manner.

Please consult with a tax advisor or chartered accountant for personalized advice based on your specific circumstances.

I hope this information is helpful.
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Answered on Jul 29, 2023

Money
Hi sir. Hope alls well with you n ur family. Sir i am a 75 year old lady living in south mumbai. I hav given my PAGRI flat of which I am BENIFICIARY OWNER / SOLE TENANT on rent to my grandson for 49,500 per month. He is claiming HRA on same. For proof he is submitting rent agreement between him and me on notarized stamp paper, Electric bill which is on my name for ownership proof of said flat, My Pan card and bank passbook xerox of both of us showing rent given by him and received by me, To his company. I am also filling my IT return and showing rent as my income. Now i hear that pagri flats cannot be given on rent. Hav no other source of income. Pls advise. Greatfully yours ZARINA.
Ans: Dear Zarina Ji,

I hope you are doing well. I understand your concern regarding the rental of your Pagri flat.

The Pagri system is indeed a unique and complex aspect of Mumbai's real estate. As per the information available, there is no specific clause in the Income Tax Act that prohibits the renting of a Pagri flat. However, the legalities surrounding the Pagri system can be quite intricate and may vary based on specific circumstances.

In your case, as you are the beneficiary owner and sole tenant of the flat, and you are declaring the rent as your income in your IT return, it appears that you are following due process. Your grandson is also providing all necessary documents to his company for HRA claim, which seems appropriate.

However, I would strongly recommend consulting with a legal expert or a chartered accountant who is well-versed in the Pagri system and its implications. This will help you ensure that you are in full compliance with all legal and tax requirements.

Stay healthy and safe.

Best regards
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Answered on Jul 27, 2023

Money
Dear Mr. Parikh, I am 86 years age and retired from IOCL (PSU). Last year I sold 2 nos. of Mutual Fund. The difference between sale and cost price was about Rs. 13296 which is less than the taxable limit of Rs. 100000/-. A sum of Rs. 10834/- was deposited as TDS. I propose to fill - ITR Form 1 including the Capital Gain of Rs. 13296 in the Exempt Income (for Reporting Purpose). Kindly advice whether this is in order or should I fill - ITR Form 2 ?
Ans: Dear Rajesh,

Firstly, I appreciate your diligence in managing your taxes. Now, coming to your query, the choice between ITR-1 and ITR-2 depends on the nature of your capital gains.

ITR-1, also known as Sahaj, is for individuals with income up to Rs. 50 lakh from salary, one house property, other sources (interest, etc.), and agricultural income up to Rs. 5,000. However, it does not allow you to report capital gains.

On the other hand, ITR-2 is for individuals and HUFs not having income from profits and gains of business or profession. It includes the provision to report capital gains.

In your case, since you have capital gains from the sale of mutual funds, even if it's less than the taxable limit, it would be more appropriate to file ITR-2. The TDS that has been deducted can be claimed as a refund in your return if your total income is below the taxable limit.

Please consult with a tax professional or chartered accountant to ensure you're following the correct procedure as per the latest tax laws.

Remember, it's always better to be accurate in your tax filings to avoid any future discrepancies or issues with the tax department.

I hope this helps.

Best Regards
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Answered on Jul 27, 2023

Money
My pension bank has shown interest earned Rs. 80000/-for the financial year 2022-23. But no such interest was credited to my account during this period. I asked the bank manager to correct it as i have to file income tax return for Financial Year 2022-23. But the bank manager said the amount is that will accrue on maturity of FDs made by me{ i.e. for ull period of FDs}. I said I will pay tax on it on maturity of FDs. But he said, it is to be paid this year ( starting of FD period) on total interest to be earned for the FD period, I am confused. Kindly help to know the correct position.
Ans: Dear Shekhar,

I understand your confusion. Let me clarify this for you.

The interest earned on Fixed Deposits (FDs) is fully taxable. It is added to your total income and taxed at the slab rates applicable to your total income. The bank deducts TDS (Tax Deducted at Source) on the interest earned if it exceeds ₹40,000 in a fiscal year (the limit is ₹50,000 for senior citizens).

Now, coming to your specific situation, the bank is following an accrual system where the interest is calculated and accounted for each year, even if it is not paid out. This is why the bank has shown the interest in your account, even though it has not been credited to your account.

The bank manager is correct in saying that the tax is to be paid in the year the interest is accrued, not when it is actually received. So, you will have to include this interest income while filing your tax return for the Financial Year 2022-23.

I hope this clears up your confusion.
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Answered on Jul 27, 2023

Money
Hardik Sir, i am retiring from Govt services shortly, all the pension benefits which i get , i would like to give it to my wife, will there be any tax implication to her for this one time transaction. Whether it is advantageous or dis advantageous to transfer to wife as one time gift, i want her to take the responsibility of this amount of around 60 lakhs.
Ans: Dear Prasanna,

Firstly, congratulations on your upcoming retirement. It's a significant milestone, and I'm here to help you navigate the financial aspects of it.

Now, coming to your question about transferring your pension benefits to your wife. As per the Income Tax laws in India, any gift received from specified relatives, such as a spouse, is not treated as income. Therefore, it is fully exempt from income tax. So, if you decide to give your pension benefits to your wife as a one-time gift, there won't be any immediate tax implications for her.

However, there's an important aspect to consider. While the gift itself is tax-free, any income generated from this gift (for example, if your wife invests this amount and earns interest or dividends) would be clubbed with the income of the giver, i.e., you, and taxed accordingly. This is known as the clubbing of income.

In conclusion, gifting your pension benefits to your wife could be a good idea if the aim is to let her manage the funds. However, the income generated from the gifted amount would still be taxable in your hands.

I hope this clarifies your query.

Best,
Hardik
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Answered on Jul 27, 2023

Money
Hello Sir, How to show the merger of shares in ITR, like I had shares of Midtree which was later merged with LTI and formed a new merged company named LTI Mindtree. Kindly help in this case, how to show in ITR. Rgds Rakesh
Ans: Hello Rakesh,

I understand your query regarding the merger of shares and how to reflect it in your Income Tax Return (ITR).

When a merger happens, the shares of the merging company (in your case, Midtree) are usually exchanged for shares in the merged company (LTI Mindtree). This is generally treated as a transfer of capital assets, and the resulting capital gains or losses need to be reported in your ITR.

Here's a simplified explanation:

1. Cost of Acquisition: The cost of acquisition of the original shares (Midtree) becomes the cost of acquisition of the new shares (LTI Mindtree).

2. Period of Holding: The period for which you held the original shares is included in the period of holding of the new shares. This is important for determining whether the gains are short-term or long-term capital gains.

3. Capital Gains: If you sell the new shares, the capital gain or loss is calculated based on the selling price and the cost of acquisition (which is the cost of the original shares).

Remember to report these details in the appropriate section of your ITR (usually under the head 'Capital Gains').

Please consult with a tax advisor or chartered accountant to understand the specifics as per your individual situation. This is a general explanation and the actual process may vary based on various factors.

I hope this helps!

Best Regards.
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Answered on Jul 27, 2023

Money
Goof afternoon sir, I My friend have STCG from shares about Rs 95000, dividend from shares is around Rs 12000. There is no other income. please guide whether he has to pay any tax or need to return the file.
Ans: Good morning Prakash,

Based on the information you've provided, your friend has Short Term Capital Gains (STCG) from shares amounting to Rs 95,000 and dividend income of Rs 12,000.

As per the tax rules in India for the financial year 2023, STCG from shares are taxed at a rate of 15%. However, if the total taxable income, including STCG, is less than the basic exemption limit (which is Rs 2.5 lakhs for individuals below 60 years), then no tax is payable.

In your friend's case, the total income (STCG + Dividend) is Rs 1,07,000 which is below the basic exemption limit. Therefore, he doesn't need to pay any tax on this income.

Regarding the dividend income, as of the financial year 2023, dividend income up to Rs 10 lakhs is exempt from tax. So, your friend doesn't need to pay any tax on the dividend income of Rs 12,000.

However, even if there is no tax payable, it is advisable to file an income tax return if the total income exceeds the basic exemption limit. In your friend's case, since the total income is below the exemption limit, he is not mandatorily required to file a return. But he may choose to do so for record-keeping purposes.

Please note that this is a general advice and the tax liability may vary based on individual circumstances. It's always a good idea to consult with a tax advisor for personalized advice.

I hope this helps!
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Answered on Jul 27, 2023

Money
Hi sir . Wishing you and your family the best in life. Sir i am a 75 year old lady living in south mumbai. I hav given my pagri flat of which i am sole owner on rent to my grandson for 49,500 per month. He is claiming HRA on same and I am also filing my tax returns . Someone told me i cant give pagri flat on rent according to IT rules. Pls advise.
Ans: Dear Shakir,

I hope you and your family are in the best of health and spirits.

Coming to your query, the Pagri system is a unique form of tenancy prevalent in some parts of India, including Mumbai. In this system, the tenant has certain rights over the property, but the ownership remains with the landlord.

As per the information available, there is no specific clause in the Income Tax Act that prohibits the renting of a Pagri flat. However, it's important to note that in the Pagri system, only tenancy rights can be transferred, not the ownership of the property.

In your case, as you are the owner of the flat, you can certainly rent it out to your grandson. The rent you receive from your grandson would be considered as your income and should be reported in your Income Tax Returns. Your grandson can claim HRA (House Rent Allowance) benefit on the rent he pays to you, provided he satisfies the conditions laid down for claiming HRA.

However, I would advise you to consult with a tax consultant or a chartered accountant to understand the complete tax implications based on your specific circumstances.

I hope this information helps.

Stay healthy and safe!

Best regards.
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Answered on Jul 26, 2023

Money
Sir, recently I have filed ITR 1. At the time of filing there is a certain amount of balance towards income tax due and duly deposited through online. After few days I have received 143 (1) and advising to deposit the same amount once again. Please advise.
Ans: Dear Mr. Tadikamalla,

I understand your concern about receiving a notice under Section 143(1) even after paying your due taxes. This notice is a standard procedure from the Income Tax Department after your ITR has been processed. It's not necessarily a cause for concern.

The notice under Section 143(1) is an intimation which is sent to inform you about any discrepancies between the income details declared by you and the data available with the Income Tax Department. It could also be due to a miscalculation of tax or an incorrect claim of deductions.

If you have already paid your tax dues and are still receiving this notice, it could be due to a few reasons:

1. The payment you made has not been credited or updated in the system yet.
2. There might be a discrepancy or error in the tax calculation.
3. The Income Tax Department might not have accounted for some deductions or exemptions you claimed.

Here's what you can do:

1. Check the tax credit statement (Form 26AS) to confirm if your tax payment is reflecting there.
2. Cross-verify the computation of income and tax in the intimation received with your own calculations.
3. If there is a mismatch or error, you can file a rectification request online under the 'e-file' option on the Income Tax Department's website.

If everything is in order and you still receive the notice, I would recommend consulting with a tax advisor or chartered accountant who can help you understand the notice in detail and guide you on the next steps.

I hope this helps.

Best Regards
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Answered on Jul 26, 2023

Asked by Anonymous - Jul 26, 2023
Money
My interest on FD has been taxed at 10% TDS already . Why does it have to be taxed again during the return filing . Example of interest is 2 lakhs and TDS is 20000.
Ans: Hello there,

I understand your concern about the double taxation on your Fixed Deposit (FD) interest. Let me clarify this for you.

The Tax Deducted at Source (TDS) is a means of collecting income tax in India and is governed under the Indian Income Tax Act of 1961. When it comes to FDs, banks deduct TDS when your interest income exceeds a certain threshold in a financial year. As of now, this limit is Rs. 40,000 for non-senior citizens and Rs. 50,000 for senior citizens.

Now, coming to your question, the TDS deducted by the bank is not the final tax. It's just a part of the total income tax you're liable to pay for the year. The bank deducts TDS at 10% (if PAN is provided) on the interest earned, but your final tax liability could be at 5%, 20%, or 30% depending on your total income for the year.

So, when you file your Income Tax Return (ITR), you need to add the interest income from the FD to your total income for the year. The tax on this total income is then calculated based on the income tax slabs. If the total tax calculated is more than the TDS already deducted, you'll have to pay the difference. Conversely, if the total tax is less than the TDS, you can claim a refund.

For example, in your case, if your total income including the FD interest falls under the 30% tax bracket, you'll need to pay an additional 20% tax on the FD interest (30% total tax minus 10% TDS already deducted).

I hope this clarifies your doubt. Please consult with a tax advisor or chartered accountant for personalized advice based on your total income and tax slab.

Best regards.
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Answered on Jul 25, 2023

Asked by Anonymous - Jul 24, 2023
Money
Hello Hardik Sir , thanks for your reply to my query dated 21 Jul. I still have doubt in point no 1 whereby by you have suggested that i should include the income of deceased till the date of death while filing return of deceased . The point which needs clarification is that in 26AS you will see the income earned and TDS deducted till the deceased accounts are closed. But As suggested i will be showing income till the day when my father died which will be less than that shown in 26As but the TDS shown is on higher income so there will be mismatch. If you say that TDS is also to be proportionally divided than how it has to be done ? How will scrutiny officer or software will understand the bifurcation done and nit send notice?
Ans: Hello again,

I understand your concern about the mismatch between the income shown in Form 26AS and the income till the date of your father's demise. Here's how you can handle this situation:

1. While filing the return for the deceased, you should indeed include the income earned till the date of death. This is as per the Income Tax Act of 1961.

2. Regarding the TDS, it is deducted based on the estimated income for the entire year. However, since your father passed away during the year, the income earned till the date of his death is less than the estimated annual income.

3. In such a case, you can claim a refund of the excess TDS deducted while filing the income tax return. The Income Tax Department will process this refund.

4. If there is a scrutiny by the Income Tax Department, you can provide the necessary documents and explain the situation. The department is aware of such circumstances and they will understand the bifurcation.

5. It's always a good idea to consult with a tax advisor or chartered accountant to ensure that the tax return is filed correctly.

I hope this clarifies your doubt.
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Answered on Jul 24, 2023

Money
Good Afternoon Sir, recently, I filed online ITR for AY 2023-2024 I am NRI working in Saudi Arabia. I received email with below subject "Important - Rectify the defect in your Return of Income" I need to rectify and return file returns again on or before Aug 03, 2023 Can you help on this matter with chargeable fees
Ans: Good Afternoon Aejaz,

I understand your concern about the notice you've received regarding a defect in your Income Tax Return for AY 2023-2024. As an NRI working in Saudi Arabia, it's crucial to ensure your tax filings are accurate.

The notice you received typically means that there might be some discrepancies or missing information in the return you've filed. This could be due to a variety of reasons such as incorrect reporting of income, deductions, tax credits, etc.

Here are a few general steps you can take:

1. Review the Notice: The Income Tax Department usually provides a reason for the defect in the notice itself. Review it carefully to understand what the issue might be.

2. Check Your ITR Form: Go through the ITR form you've filled out. Make sure all the information is accurate and complete. Pay special attention to the sections related to foreign income, as this is a common area where mistakes can occur for NRIs.

3. Rectify the Defect: Once you've identified the issue, you can rectify it by logging into the e-filing portal. You'll need to revise your return with the correct information and submit it again.

Please note that this is general advice and the exact steps might vary depending on the specifics of your case. If you're finding it difficult to rectify the defect yourself, it might be beneficial to seek professional help. As a tax professional, I can certainly assist you with this on a chargeable basis.

Remember, the deadline for rectifying the defect is August 3, 2023. It's important to act promptly to avoid any further complications.

I hope this helps! If you need further assistance, feel free to reach out.
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Answered on Jul 24, 2023

Money
Dear Sir...Can the LTC Loss of Rs.3.5Lacs incurred against Flat Sale ( after 12Yrs) in May2023 can be adjusted against LTC Gains of Rs.4Lacs earned from Redemption of Eq.Shares & Mutual Funds ( after 5Yrs.) In June2023..and the Balane of Rs.50Thousand of LTC Gains be Exempted upto 01Lac. Also any Limit of upto 02Lac LTC Loss only can be adjusted against 4L LTC Gains in this FY 2023-24 and the Balance of 1.5L LTC Loss to be carried ovet in subsequent year which can be adjusted ONLY against LTC Gains earned from Property in that Year. Pl advise & Clarify...Thanks. Sanjiv Kumar.
Ans: Dear Sanjiv,

Based on the information available, it appears that you can indeed adjust your Long Term Capital (LTC) loss against LTC gains in the same financial year.

In your case, the LTC loss of Rs. 3.5 Lacs from the sale of a flat can be adjusted against the LTC gain of Rs. 4 Lacs from the redemption of equity shares and mutual funds. This leaves you with a balance LTC gain of Rs. 50,000.

As per the Income Tax Act, LTC gains up to Rs. 1 Lac are exempt from tax. Therefore, your balance LTC gain of Rs. 50,000 should be exempt.

Regarding the limit of LTC loss adjustment, there doesn't appear to be a specific limit of Rs. 2 Lacs for adjusting LTC loss against LTC gains. However, any unadjusted LTC loss can be carried forward to subsequent years and set off against future LTC gains.

Please note that this is a general interpretation based on the available information. For a more accurate understanding of your tax liability, I would recommend consulting with a tax professional or a chartered accountant who can provide advice based on a comprehensive understanding of your financial situation.

I hope this helps!
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Answered on Jul 23, 2023

Asked by Anonymous - Jul 20, 2023
Money
Hellow Sir, In February, 2023 I had sold a House Property and there is Capital Gain around 15.00 lakh. From the sale proceed I received, I have already bought a housing plot(land) costing Rs.11.00 Lakh, in May, 2023, in a Govt. approved scheme and this has also been registered in my favour. All other formalities for its mutation has also been completed. Since I am planning to construct house on this newly acquired Plot in next 2 years, kindly guide:- (1)whether the amount already incurred in acquiring above Housing Plot would also be considered against utilization of Capital Gain ? (2)the amount I have to kept in the Capital Gain Account Scheme for utilization during construction of House shall be Rs.15.00 Lakh OR Rs.4.00 Lakh (after deducting cost of Plot i.e. Rs.11.00 Lakh) ? Kindly Guide Regards !
Ans: Hello,

I understand your situation and I'm here to help. Based on the details you've provided and the current tax laws in India, here's what you need to know:

1) The amount you've spent on acquiring the housing plot can indeed be considered for the utilization of your capital gain. As per the Income Tax Act, if you reinvest the capital gains from the sale of a property in buying a new property or constructing a new house, you can claim tax exemption on the capital gains.

2) The amount you need to keep in the Capital Gain Account Scheme (CGAS) would be the remaining amount after deducting the cost of the plot from the capital gain. In your case, if you've already spent Rs. 11.00 Lakh on the plot, you would need to keep Rs. 4.00 Lakh (Rs. 15.00 Lakh - Rs. 11.00 Lakh) in the CGAS. This amount should be utilized for the construction of the house within the specified time period, which is 3 years from the date of sale of the original property.
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Answered on Jul 23, 2023

Asked by Anonymous - Jul 21, 2023
Money
Mrs X is disabled due to severe paralysis. He has two sons A & B and husband Y. Both sons spend Rs. 55000/- each on her medicines and Rs. 85000 each on her msintenance. Her hisband spend Rs. 150000/- on her maintenance. RS. 70000/- are spent on medicines from her own income. How should individuals claim in their returns
Ans: Hello,

Based on the information provided and the tax laws in India, here's how each individual can claim deductions in their tax returns:

1. Mrs. X: As a person with severe paralysis, Mrs. X can claim a tax deduction under Section 80U of the Income Tax Act. This section provides tax benefits to individuals who suffer from certain disabilities. The deduction amount for a person with severe disability (80% or more) is Rs. 1,25,000. Mrs. X can claim this deduction for the Rs. 70,000 she spends on her medicines from her own income.

2. Sons A & B: Both sons can claim a tax deduction under Section 80DDB for the amount they spend on their mother's medical treatment. This section provides a deduction for the amount spent on the treatment of specified ailments, which includes neurological diseases where the disability level is 40% and above. The maximum amount that can be claimed under this section is Rs. 40,000 (Rs. 1,00,000 in case of severe disability). Each son can claim this deduction for the Rs. 55,000 they each spend on their mother's medicines.

3. Husband Y: Mr. Y can claim a tax deduction under Section 80DD for the amount he spends on the maintenance of his wife. This section provides a deduction for the expenses incurred on the maintenance and medical treatment of a dependent who is a person with a disability. The deduction amount is Rs. 75,000 for disability and Rs. 1,25,000 for severe disability. Mr. Y can claim this deduction for the Rs. 1,50,000 he spends on his wife's maintenance.

Please note that these deductions are subject to the conditions specified in the respective sections of the Income Tax Act. Also, the disability should be certified by the medical authorities as specified in the Act.
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Answered on Jul 23, 2023

Asked by Anonymous - Jul 21, 2023
Money
Hello , My mother has some investments in shares & mutual funds. She wants to now distribute this ( gift) equally to all her children & keep one portion for her. Pls let me know what is the process to be followed & what will be the most tax efficient method . Does she needs to make a gift deed for each of her children ?
Ans: Hello,

Your mother's intention to distribute her investments among her children is a thoughtful gesture. Here's a simple explanation of the process and its tax implications in India.

1. Gifting Process: Your mother can gift her shares and mutual funds to her children. This can be done through a gift deed or even a simple letter stating her intention to gift the shares. The letter should mention the details of the shares/mutual funds, the name of the recipient, and the relationship between the donor (your mother) and the donee (her children).

2. Tax Implications for the Donor (Your Mother): In India, any gift given by a parent to their child does not attract any tax, irrespective of the value. So, your mother will not have to pay any tax when she gifts these shares and mutual funds to her children.

3. Tax Implications for the Donee (Her Children): The children will not have to pay any tax upon receiving the gift. However, if they decide to sell these shares or mutual funds in the future, they will be liable to pay tax under the head 'Income from Capital Gains'. The tax rate will depend on whether it's a short-term or long-term capital gain.

4. Gift Deed: Although it's not mandatory, it's advisable to execute a gift deed for each child. This will serve as a legal document and can be useful in case of any disputes in the future.

I hope this helps!
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