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Chat Transcript

Balwant Jain

Tax and Investment Expert ,

Know the taxation of gratuity


Questions Answered


rishi_1964: I read somewhere that some individuals must pay estimated tax each year. However, I received conflicting information from another source. What is correct?

Balwant Jain: Yes you have heard it right. I presume you are talking about advance tax. So as per the income tax laws the government expects you to pay the tax as you earn. For individuals one has to pay the advance tax in four installments in prescribed ratio. Any amount paid before 31st March is treated as advance tax. One does not have to pay advance tax in case his net tax liability after TDS does not exceed Rs. 10,000. The senior citizens also do not have to pay advance tax if they do not have any income under the head Business or profession. If you fail to pay the advance tax or if there is shortfall you have to pay interest for the default or difference.

rishi_1964: How many times a person can invest the capital gains on houses? 2. I own a house jointly with my son jointly (50% each). Want to buy another house. Is this my second house?

Balwant Jain: As per section 54 of the income tax act, there are no restrictions as to the number of times or in number of properties for which a person can claim the exemption from payment of tax on long term capital gains arising on sale of a residential house. Even there is no restriction as to the number of residential properties which you can own on the date of sale or investment for claiming exemption under Section 54 for investment of long term capital gains arising on sale of a residential house in another residential house. It is only under Section 54F that the restriction on number of houses which one can own, is prescribed for claiming exemption from payment of long capital gain arising on any long term asset other than a residential house is available. Please note that the exemption of capital gains is available only if the residential house which you are planning to sell has been held by you for 24 months or more on the date of sale.

rishi_1964: I recently found out that I did not include some of my income on my tax return. What should I do?

Balwant Jain: Since you have omitted to include some of the income in the ITR filed by you, you can file a revised return The revised return can only be filed within a period of one year from end of the relevant assessment year or before assessment is completed whichever is earlier. In case you can not revise the return now. Just keep quite and respond if you receive any notice from the income tax department. I presume you filed your income tax return yourself which is not advisable. this is like self medication. You should take help of professional Chartered Accountant to file your return. They can ensure better compliance and will be able to give you value addition as well.

rishi_1964: I am a salaried person working at Kolkata. I am paying rent at Kolkata. I have owned flat at Hyderabad & which is vacant at present. I am paying maintenance for that flat. How to get the Tax benifit for that amount

Balwant Jain: As the Hyderabad property is lying vacant, you can treat this as self occupied property and thus its annual value for the purpose of tax is NIL. For self occupied property only interest paid for money borrowed is allowed up to Rs. 2 lakhs and no deduction is allowed for municipal taxes paid by you. Anyway maintenance charges paid are not allowed as deduction under the tax laws.

rishi_1964: Sir, I will need some 2-3 lakh rs. after 5 or 6 years. At the same time, I want to get tax exemption under Section 80 (C). Sir, whether I should go for tax saving FDs or NSCs? what will be better option for me?

Balwant Jain: Since you want the money to be available after 5 years both the products qualify for investment under Section 80C and tenure of both the products is 5 years. However NSC scores over the bank FD as the interest accrued on NSC also qualifies for deduction under section 80 C for first four years. Moreover in case you need money even before 5 years you can not use the tax saving FD for this purpose as you can not take any loan against it. However you can pledge the NSC and avail overdraft facility or loan against it. So in my opinion NSC is better option than than tax saving FD. The the rate of interest offered by NSC is more than bank FD and is also more secure.

rishi_1964: One of our employees has claimed tax exemption under Sec.80G by producing a cash receipt from a charitable firm in Bangalore. Is there any way to confirm whether the said firm is genuine and is eligible under Sec.80G? Can we confirm it from IT Dept. website?

Balwant Jain: As per the circular issued by the CBDT from year to year for deduction of tax from Salary under Section 192 it is clearly provided that though deduction under Section 80 G is available for donations made to various charitable trusts, the employers are directed not to take cognizance of all such donations while deducting tax at source. The circular allows donations made to specified funds like Prime Minister’s Relief Fund, or Chief Minister’s Relief Funds to be considered by the employers. So the benefit of Section 80 G claimed by your employee can not be considered by you for TDS. However the employee concerned can claim tax benefits for such donations while filing his income tax return. No donations in cash up to 2000 are allowed for deductions under Section 80G.
Balwant Jain: Thank you everyone. In case you wish to ask any question related with tax or investment, please send them on
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