Summary of this article
House sale losses can offset future LTCGs.
Advance tax helps avoid interest liabilities.
Gifts from children are generally tax-free.
I sold my house last year at a loss. I had purchased it in 2021. Should I show the loss in my income tax return (ITR)?
Under the income tax laws, a taxpayer is entitled to set off and carry forward losses incurred during the year, subject to fulfilment of certain conditions. The long-term capital loss (LTCL) incurred by you on sale of your house is eligible for set-off during the same year if long-term capital gains (LTCGs) are available. If no LTCG is available for set-off during the year, the LTCL can be carried forward for set-off in subsequent years. In order to be eligible for such carry forward, you have to file your ITR by the due date, which is July, 2026 unless you have any business income. So, it is advisable that you file your ITR by July 31 so that you can set off this loss in future against any LTCGs in future.
My employer has not deducted any tax on my salary, as there is no tax liability due to rebate under Section 87A. However, my bank has deducted a tax of 10 per cent on the interest earned on my fixed deposit with the bank. At the time of filing my ITR, both my salary and FD interest will be clubbed and I have to pay interest in addition to the tax payable as I fall under the higher tax slab. Can this be rectified?
While computing the total tax payable on your salary, the employer takes into account the taxable salary unless you report your other income to the employer. The banks have to deduct tax at 10 per cent on the interest irrespective of the quantum of the interest being credited if the aggregate interest credited during the year exceeds Rs 50,000.
Your aggregate tax liability for a financial year is computed with reference to all the income taken together. This is the reason why you have to pay interest while filing your ITR. The tax laws require a person to pay advance tax in four instalments during the year if the aggregate tax liability after setting off advance tax, tax deducted at source (TDS), and tax collected at source (TCS) exceeds Rs 10,000. In order to avoid paying the interest, you have to pay advance tax. Alternatively, you can report your other income to your employer who will then take the income reported by you in account while deducting tax.
I am retired and have three sources of income - bank interest, rent, and a monthly amount given by my son. Under which section will the amount given by my son be exempted? Also, which ITR form should I use for filing my return?
The monthly payment received by you from your son can be treated as a gift received by you.
Under the provisions of the income tax laws, if the aggregate value of all the gifts received during the financial year exceeds Rs 50,000, the same is treated as income of the recipient and the recipient has to pay tax at the slab rate. However, there are a few exceptions to this rule of taxability of gifts under the tax laws. One of the exceptions is in respect of gifts received from specified relatives, including children. So the monthly amount received by you from your son will be treated as a gift and not as your income.
Do note that there is a difference between an amount being treated as exempt income and the same not being treated as income at all. You are required to report only the exempt income in your ITR and not the items which are not treated as income at all. Therefore, you are not required to disclose the amount of gift received from your son during the year in your ITR. However, if you wish you can disclose the same under the “EI” schedule of the ITR form.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
