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Wrongly filed ITR can be revised

LiveMint logoLiveMint 22-05-2017 Parizad Sirwalla

I filed ITR in May 2016 for FY2015-16 and the infornation provided was completely wrong. How can I correct it? I didn’t send acknowledgement to the Commissioner of Income-tax (CPC).

—P.K. Sharma 

Although you filed your return for the FY 2015-16 electronically, you did not send the acknowledgement for having filed your return (i.e. ITR-V) to the CPC within 120 days from the date of filing. We assume that you did not verify your return electronically either. E-verification is possible using your bank account or Aadhar card or digital signature within 120 days of filing the tax return. Your return will therefore be treated as invalid. The tax department has not notified any extended timeline for sending the signed ITR-V (acknowledgment) for FY 2015-16. Therefore, in this scenario, you have two options:

A. You could approach the CPC with the signed ITR-V requesting this authority to condone the delay in sending the ITR-V. If your tax return is approved by the authority, you will have an option to revise your return. In such a scenario, if there is any additional tax payable, there would be interest for delayed payment. However, interest under section 234A (for belated filing of tax return) of the Income Tax Act, 1961 (the Act) would not be applicable.

B. You could file your belated return on or before 31 March 2018 which will have the following tax implications:

1. Any loss cannot be carried forward to the future years;

2.Interest for delaying in payment of extra taxes (Section 234B and Section 234C) and interest for belated filing of return (Section 234A) would apply; and

3. Penalty of Rs5,000 may be levied at tax department's discretion.

I am planning to disinvest my property in Delhi. What is the tax implication if I deposit the entire amount in my account? Also, I need clarification on filling the ITR. 

—Bindu

It is our assumption that the property you are referring here is a house property and you had held this property for more than 24 months. Disinvestment of your property will attract capital gains tax at time of sale. The capital gain should be computed as the difference between net sale proceeds and cost of acquisition and improvement after claiming indexation benefit, if any. Any gain would then attract 20% taxes along with education cess of 3%. Further, surcharge of 15% or 10% will be levied as applicable. Assuming that the net computation is a gain, you can avail an exemption from capital gains tax by reinvesting the capital gain in one new residential property situated in India, within 1 year prior or 2 years after the sale date of old house (if the property is acquired) or within 3 years (if the house is constructed) and subject to other conditions laid down in section 54 of the Income-tax Act, 1961. 

However, if you are unable to make the new investment by the due date of filing the tax return, i.e., 31 July, you should deposit the money in the Capital Gains Account Scheme (CAGS) with a prescribed nationalized bank, to be able to claim the aforesaid exemption in the tax return. The amount deposited in the CAGS account has to be used or reinvested in new residential property within the timeframe specified above.

Conversely, if you had held the property for not more than 24 months and the net computation is a gain, then taxes would be levied at your normal slab rates and none of the above provisions would be applicable.

I am a central government employee and I am going to Japan for 3 months for research work. How can I get the certificate of coverage from India?

—Dr. Tapan Kumar Kar

Central government employees are generally covered under General Provident Fund (GPF) scheme or National Pension System (NPS) if enrolled after 1 January 2004. If an employee is covered under GPF or NPS, then Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF) would not be applicable. Therefore, as you are covered under GPF or NPS, you will not be able to obtain a Certificate of Coverage under the EPF Act.

We understand that you are going to Japan for 3 months for research work and you would continue to contribute to GPF or NPS as applicable while you are in Japan on research work. Given that you are a central government employee and may be visiting Japan on a government sponsored visa for a project or research relating to Government of India, it may be advisable to also seek clarification from your Japan employer or the visa sponsoring entity to check if you and your Japan employer are required to contribute to Japan Social Security on the basis of your stay requirement and type of visa. 

Parizad Sirwalla is partner (tax), KPMG.

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