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Ltcg tax paid on received advance amt before final transfer

B.D.Biswas (Chief Manager) (29 Points)

09 February 2017

I Received 21L on 21-2-2016 against sale of old inherited property.

Property finally transferred (Registered) on 18-4-2016, when balance amount of 28L received.

TDS @ 10% was paid on 21-2-16 and 18-4-16 against the respective payments received.

I submitted return and paid TAX on Rs. 21L in the AY 2016-17, as Long term capital gain adjusting the TDS of 21000/- for the amount, and I thought that the TAX (LTCG) on balance amount will be paid during AY 2017-18.

I was not aware of the rule, that LTCG Tax is to be paid only after final transfer (i.e. after registration) only.

Now my question is :

1) HOW TO REVISE THE RETURN OF AY 2016-17 AND WHERE TO (WHICH HEAD) SHOW Rs 21L IN 2016-17,

2) HOW TO SUBMIT THE RETURN OF AY 2017-18

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11 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177488 Points)
Replied 09 February 2017

1. You can revise the return for AY 2016-17, provided you had filed original return u/s. 139(1), before 5th August, 2016.

2. You can file ITR for AY 2017-18 only after March 31,2017. But pay your advance tax liability now.

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B.D.Biswas (Chief Manager) (29 Points)
Replied 10 February 2017

1. In revised return what should be the LTCG amt ? Whether will be zero ? Should I submit REVISED return showing zero LTCG tax claiming full refund ?

2. Then, how the TDS for 2016-17 will then be adjusted ? This amt will not be reflected in 2017-18 (26AS) .

3. Similarly, during 2017-18 return submission, the TDS of 2016-17 will not be available.

HOW TO RESOLVE THE ISSUE WHEN I HAVE PAID THE TAX HONESTLY.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177488 Points)
Replied 10 February 2017

Your tax liability rests on actual transfer of the property, whichever year it actually takes place as per section 2(47) of I T act.

"...........I was not aware of the rule, that LTCG Tax is to be paid only after final transfer (i.e. after registration) only............" is not totally correct.

If by way of any registered agreement on 21/02/2016, transfer of property is considered, you were required to pay total capital gains tax by march 2016 itself.

But if that was only advance and no agreement/transfer occured, you can revise the return and claim the TDS as refund.

B.D.Biswas (Chief Manager) (29 Points)
Replied 11 February 2017

Sir,

My case is further interesting, as I received the consideration money (sell value) on two Financial year (2015-16 and 2016-17), while

a. The transfer take place in 2016-17 … TDS deducted only on the amount paid during 2016-17…

and

b. I submitted return in 2015-16 on the advance amount (21L) which was received on that year considering the TDS deducted in 2015-16.

NOW, if I REVISE the return of 2015-16 for refund of ‘full amount of tax’, paid in 2015-16 including the TDS paid on that year,

then, how I will get/ adjust the TDS against the advance amount (of 2015-16) while I will submit return of 2016-17 on full consideration value ( paid in 2015-16 + in 2016-17).

Moreover, I intend to apply the indexation during this year .

It would have been simpler if there was any provision to link the return of previous year with the current year … I am really in soup … seeking expert advice for an easy and hassle free solution avoiding future complecations…

Thanks …

B.D.Biswas (Chief Manager) (29 Points)
Replied 11 February 2017

I had replied elaborating the problem for solution ...

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177488 Points)
Replied 11 February 2017

There are so many misconception in the deal, like TDS was not required to be deducted for sale value 49 lakhs (from indian resident). TDS u/s. 194 IA is applicable on over 50 lakhs and above. Even if deducted its rate is 1% and not 10 %.

Considering seller as NRI, the rate of TDS decuction is 20.66% and not 10%.

In short, let me tell that the property cannot be sold partly. Either its sold in 2015-16 or 2016-17, the payment mode is not considered here.

Assuming that you received only ADVANCE in last year and no transfer taken place in that year, you were eligible for the TDS refund. Now if you revise it the TDS can be either be refunded back or can be carried forwarded to next year. But in that case 21 lakhs will be treated as advance and not part sell amount.

1 Like

B.D.Biswas (Chief Manager) (29 Points)
Replied 11 February 2017

Sir,

Thank U sir, It seems that there is no other option but to claim refund of full tax, paid against the advance, received during FY2015-16 along with the TDS.

First, let me clear your confusions :

I am not a NRI
I wrongly indicated TDS as 10%, it is actually 1% of Rs. 21L, that is Rs. 21000/- (during 2015-16)
There is some untold fact on this old & inherited property. This property has a share of my brother and the total sell cost is Rs. 98L, my share is of Rs.49L only. Thus TDS was applicable and was paid against both of us separately in 2015-16 (on advance amt) and 2017-18(on balance amt.)
My brother submits his TAX return through tax consultant, unlike me and he didn’t show this amount (advance) during 2015-16. So he does not bother of similar problem like me.

NOW, SIR, AS PER YOUR ADVICE I HAVE TO CLAIM REFUND OF FULL TAX, i.e. OF Rs. 4.2 Lakh.

I AM AFRAID THE CASE MAY BE SEND FOR SCRUTINY, WHAT I ALWAYS TRIED TO AVOID AND FOR THIS I MADE THE HONEST APPROACH OF FILING RETURN SHOWING THE ADVANCE RECEIVED IN 2015-16.

HOWEVER, THANK U INDEED SIR, FOR YOU ADVICE AND FOR FUTURE ADVICE, IF ANY.

B.D.Biswas (Chief Manager) (29 Points)
Replied 11 February 2017

Sir,

Thank U sir, It seems that there is no other option but to claim refund of full tax, paid against the advance, received during FY2015-16 along with the TDS.

First, let me clear your confusions :

I am not a NRI
I wrongly indicated TDS as 10%, it is actually 1% of Rs. 21L, that is Rs. 21000/- (during 2015-16)
There is some untold fact on this old & inherited property. This property has a share of my brother and the total sell cost is Rs. 98L, my share is of Rs.49L only. Thus TDS was applicable and was paid against both of us separately in 2015-16 (on advance amt) and 2017-18(on balance amt.)
My brother submits his TAX return through tax consultant, unlike me and he didn’t show this amount (advance) during 2015-16. So he does not bother of similar problem like me.

NOW, SIR, AS PER YOUR ADVICE I HAVE TO CLAIM REFUND OF FULL TAX, i.e. OF Rs. 4.2 Lakh.

I AM AFRAID THE CASE MAY BE SEND FOR SCRUTINY, WHAT I ALWAYS TRIED TO AVOID AND FOR THIS I MADE THE HONEST APPROACH OF FILING RETURN SHOWING THE ADVANCE RECEIVED IN 2015-16.

HOWEVER, THANK U INDEED SIR, FOR YOU ADVICE AND FOR FUTURE ADVICE, IF ANY.

B.D.Biswas (Chief Manager) (29 Points)
Replied 11 February 2017

Sir,

Thank U sir, It seems that there is no other option but to claim refund of full tax, paid against the advance, received during FY2015-16 along with the TDS.

First, let me clear your confusions :

I am not a NRI
I wrongly indicated TDS as 10%, it is actually 1% of Rs. 21L, that is Rs. 21000/- (during 2015-16)
There is some untold fact on this old & inherited property. This property has a share of my brother and the total sell cost is Rs. 98L, my share is of Rs.49L only. Thus TDS was applicable and was paid against both of us separately in 2015-16 (on advance amt) and 2017-18(on balance amt.)
My brother submits his TAX return through tax consultant, unlike me and he didn’t show this amount (advance) during 2015-16. So he does not bother of similar problem like me.

NOW, SIR, AS PER YOUR ADVICE I HAVE TO CLAIM REFUND OF FULL TAX, i.e. OF Rs. 4.2 Lakh.

I AM AFRAID THE CASE MAY BE SEND FOR SCRUTINY, WHAT I ALWAYS TRIED TO AVOID AND FOR THIS I MADE THE HONEST APPROACH OF FILING RETURN SHOWING THE ADVANCE RECEIVED IN 2015-16.

HOWEVER, THANK U INDEED SIR, FOR YOU ADVICE AND FOR FUTURE ADVICE, IF ANY.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177488 Points)
Replied 12 February 2017

"NOW, SIR, AS PER YOUR ADVICE I HAVE TO CLAIM REFUND OF FULL TAX, i.e. OF Rs. 4.2 Lakh.."

one more confusion. TDs deducted from your payment is 21,000/- or 4.2 lakhs?

If only 21K, wait for return to get processed. Then you can revise/rectify so that your fear for "I AM AFRAID THE CASE MAY BE SEND FOR SCRUTINY," would be minimized.

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B.D.Biswas (Chief Manager) (29 Points)
Replied 13 February 2017

Sir,

Rs. 21000/- TDS was available from 26AS as 1% of 21,00,000/- ... Total tax paid against the advance amount in 2015-16 was Rs. 4.2L, including the TDS 21000/-; This whole amount to be claimed as refund aginst 2015-16, Thats what you adviced, is it not sir?....That's why I apprehend that the case to be reviewed/ scrutinised...