How to E-Verify Income Tax Return

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How to E-verify Income Tax Return

There are different ways to do this given below:

1. Via Aadhaar- OTP based

To verify your ITR via aadhaar, your mobile number should be linked to the aadhaar card and your PAN should also be linked with the Aadhaar.

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Steps to be followed:

  • Login on Income Tax portal.

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  • Click on ‘View Returns/ Forms’

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  • Select ‘Income Tax Returns’ and ‘Submit’

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  • Click on “Click here to view your returns pending for e-verification”

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  • Click on ‘e-verify’

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  • Select the option “I would like to generate Aadhaar OTP to e-verify my return”

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  • An SMS with 6-digit OTP will be sent to your registered mobile number

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  • Enter the OPT received and click on “Submit”

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2. Generating EVC via Net Banking

You can e-verify your ITR with the help of net banking. But only few banks provide that facility.

Your PAN must be linked with the bank account.

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Steps:

  • Login to your bank account
  • Select the e-verify option under the ‘Tax’ tab. You will be directed to e-filing website.
  • Click on ‘Generate EVC’ option on ‘My account’ tab.
  • A digit alpha-numeric digit will be sent to your email or mobile number
  • Now go to ‘e-verify’ option under ‘My account’ tab
  • Click on the option ‘I have EVC already’
  • Enter the OTP you received on your mobile number & click on ‘Submit’.

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List of banks that provide this facility:

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3. Generating EVC via Bank Account

In order to e-verify your ITR through this process, first you have to pre-validate your bank account.

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How to pre-validate your bank account

  • Go to the “Profile settings” in your e-filing account to pre-validate your account.
  • Enter the required details such as:
    • Bank’s name
    • Account number
    • IFSC Code
    • Mobile number (linked with the bank account)
  • The pre-validation will be successful, if all the information matches with the bank account records.

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Now, e-verify your ITR by following these steps:

  • Select “Generate EVC” option under the “My Account” tab.
  • An OTP will be sent on your registered mobile number
  • Select “E-verify” under “My Account” tab.
  • Enter the OTP & click on “Submit”

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List of banks provide this facility: 

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4. Verifying ITR through Demat Account

It is same as that of bank account. First you have pre-validate your demat account.

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How to pre-validate Demat account:

  • Go to “Profile settings” in your e-filing account.
  • Enter the required details:
    • Mobile number (linked to demat account)
    • Email ID (linked to demat account)
    • Depository name (NSDL or CSDL)

 Usually it takes 1-2 hours to pre-validate your demat account.

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Once your account is pre-validate, e-verify your ITR following the given procedure:              

  • Select “Generate EVC” option under the “My Account” tab.
  • Select “Generate EVC through Demat Account Number”
  • An OTP will be sent on your registered mobile number
  • Select “E-verify” under “My Account” tab.
  • Enter the OTP & click on “Submit”

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SECTION 44AD – PRESUMPTIVE TAX SCHEME FOR BUSINESSES

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Who can opt for presumptive taxation scheme under Section 44AD?

All the small businesses with total turnover/gross receipts of up to Rs. 200 Lakh (except the business of plying, hiring and leasing goods carriages covered under section 44AE).

Resident Individuals, HUF’s and partnership firms (but not LLP) and who has not claim deductions under Section 10AA, 10A, 10B, 10BA or deductions under any provision of Chapter VIA under the heading “C- Deductions in respect of certain incomes” in the relevant assessment year.

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What is the tax rate under this scheme?

In the presumptive taxation scheme tax would be charged on 8% of total turnover/gross receipts.

However, the taxable amount would be “6%” instead of 8% of total turnover or gross turnover receipts, if the amount is received

  • By an account payee cheque or
  • By an account payee bank draft or
  • By use of electronic clearing system
  • Through a bank account or
  • Through such other electronic mode as may be prescribed

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Are there any deductions available under this scheme?

The answer to this is no.

All the deductions under section 30 to 38 shall be deemed to have been allowed in full & no further deduction shall be allowed.

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Treatment of WDV of assets

The WDV of any asset of such shall be deemed to have been calculated as if the assessee has claimed and had been actually allowed deduction in respect of depreciation for it.

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Do we have to prepare books of accounts & audit?

Under this scheme a relief is provided to small businessmen from maintaining the books of accounts & audit. Such assessee opting for the presumptive scheme are not required to maintain books of accounts under section 44AA or get them audited under section 44AB.

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Higher threshold limit for non-audit of accounts for assesses opting for this scheme

Under section 44AB, it is obligatory for every person carrying on business to get their books of accounts audited, if his total sales or turnover or gross receipts exceed Rs. 1 crore.

However, if an eligible person opts for presumptive taxation scheme under section 44AD, he will be not required to get his accounts audited if the total turnover or gross receipts does not exceed Rs. 2 crores.

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Who is not eligible to opt for this scheme?

The following persons are specifically excluded from the applicability of this scheme:

  • A person carrying on profession as referred in section 44AA (1) i.e. legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the board.
  • A person earning income in the nature of commission or brokerage
  • A person carrying on any agency business.

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What if the person decided to not to opt for the presumptive taxation under Section 44AD?

If a person opts for presumptive taxation scheme under section 44AD, the he has to continue to pay tax under this scheme for the next 5 subsequent financial years.

If he decided to opt out of this scheme in any of these subsequent years, he won’t be able to take benefit of the presumptive taxation scheme under section 44AD for the next 5 years.

This person also required to maintain books of accounts under section 44AA, provided his total income exceeds the basic limit and have to get their books audited under section 44AB.

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FAQ

1.X is an insurance agent and has a total turnover of Rs. 75 lakhs in F.Y. 2019-20. Is he eligible to opt for presumptive taxation scheme under section 44AD?

  • A person earning an income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme under Section 44AD. So, an insurance agent cannot adopt the presumptive taxation scheme.

 

2. I have a total turnover of Rs. 1 crore in F.Y. 2019-20 and have opted for presumptive taxation scheme under section 44AD. Can I claim deduction for depreciation on assets?

  • No, in case of a person opting for presumptive taxation scheme cannot claim deduction for depreciation. As under this section it is assumed that the deduction for depreciation has already been allowed and WDV of such asset shall be deemed to have been calculated.

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3. In the F.Y. 2017-18, Mr. Raj filed his ITR under the presumptive taxation scheme for the first time, but in F.Y. 2018-19 he decided to opt out of it. Now, in F.Y. 2019-20, he wants to adopt presumptive taxation scheme again. Is he eligible to do so?

  • No, he cannot opt for the scheme in F.Y. 2019-20. If a person opts for presumptive taxation scheme under section 44AD, the he has to continue to pay tax under this scheme for the next 5 subsequent financial years. If he decided to opt out of this scheme in any of these subsequent years, he won’t be able to take benefit of the presumptive taxation scheme under section 44AD for the next 5 years.

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4. I have a total turnover of Rs. 1.5 crore and opted for presumptive taxation scheme. I forget to pay advance tax on business income on or before 15th March of the F.Y. But I paid the tax on 25th March, so do I have to pay interest on that amount?

  • Yes, if you pay advance tax after 15th March of the F.Y., you have to pay interest on that amount @1% per month from due date till the tax is paid.

 

5. I’m doctor by profession and have a total turnover of Rs. 50 lakhs in F.Y. 2019-20. Can I opt for presumptive taxation scheme under section 44AD?

  • No, a person carrying on profession as referred in section 44AA (1) cannot opt for presumptive taxation scheme.

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6. In the F.Y. 2018-19, I opted for presumptive taxation scheme for the first time. Now, in F.Y. 2019-20 my total turnover are Rs. 1.5 crore and I wanted to opt out of the scheme. Do I have to prepare books of accounts & get them audited?

  • Yes, you have to prepare books of accounts for F.Y. 2019-20 under section 44AA and get them audited under section 44AB as total turnover for the year exceeds the basic limit.

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7. What is the due date for filing income tax return if, a person opts for section 44AD & in the case he didn’t opt for presumptive taxation scheme?

  • In case of a person opts for presumptive taxation scheme under section 44AD, the due date for filing income tax return would be 31st July of A.Y.

In case of a person does not opt for the presumptive taxation scheme under section 44AD, he is required to get his books of accounts audited, and in that case, he can file his return on or before 30th September of A.Y.

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8. I have a total turnover of Rs. 1.6 Crores and I have opted for 44AD. Do I need to get my accounts audited as my total turnover exceeds Rs 1 Crores?

  • No, if you opted for Section 44AD, you are not required to get your accounts audited even if your total turnover exceeds the limit of Rs 1 crores.

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Section 44ADA – Presumptive Tax Scheme for Professionals

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Who can opt for presumptive taxation scheme under Section 44ADA?

To claim benefits of non-maintenance of Books of Account, you need to fulfill the following two conditions:

1.The person needs to be a professional, who belongs to any of the following professions:

2. legal,

3. medical,

4. engineering or

5. architectural profession or

6. the profession of accountancy or

7. technical consultancy or

8. interior decoration or

9. any other profession as is notified by the board (Board here means the Central Board of Direct Taxes), &

10. Should have Total turnover or Gross Receipts below or equal to Rs 50 lakhs in the previous year.

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What is the presumptive tax rate under this Section 44ADA?

In the presumptive taxation scheme under Section 44ADA the tax would be charged on 50% or more (as claimed to have been earned by the assessee) of the total turnover or gross receipts.

It implies that the 50% or more (as claimed to have been earned by the assessee) of the total gross receipts would be treated as profits & gains from profession.

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Are there any deductions available under this scheme in relation to expenses incurred for the profession?

The answer to this is no.

All the deductions under section 30 to 38 shall be deemed to have been allowed in full & no further deduction shall be allowed.

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Are there any deductions available to the person opting this scheme in relation to Chapter VI-A i.e. Section 80C, 80D, etc.?

Yes, those deductions will be available as available to other persons.

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Treatment of WDV of assets

The WDV of any asset of such shall be deemed to have been calculated as if the assessee has claimed and had been actually allowed deduction in respect of depreciation for it.

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Do we have to prepare books of accounts & audit?

Under this scheme a relief is provided to professionals referred in Section 44AA (1) from maintaining the books of accounts & audit. Such assessee opting for the presumptive scheme are not required to maintain books of accounts under section 44AA or get them audited under section 44AB.

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What if the person wants to claim lower profits than 50% of the total gross receipts?

In case of a person, wants to claim profits lower than the profits assumed under section 44ADA i.e. 50% of total gross receipts and his total income exceeds the maximum amount which is not chargeable to income tax i.e. 2, 50,000, he has to maintain books of accounts under section 44AA & get them audited under section 44AB.

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FAQ’s

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1. Raj is an insurance agent, his total turnover for the F.Y. 2019-20 is Rs 48 lakh. Is he eligible to opt for presumptive taxation scheme under section 44ADA?

  • A person earning an income in the form of commission or brokerage cannot opt for the presumptive taxation scheme under section 44ADA. So Mr. Raj is not eligible.

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2. I’m an architect by profession. I have total gross receipts of Rs 45 lakh in the F.Y. 2019-20. I want to claim a profit of Rs. 20 lakh in the F.Y. 2019-20 which are less than 50% gross receipts. Do I have to maintain books of accounts?

  • Yes, you have to maintain books of accounts & get them audited. If you want to claim lower profits and have income which exceeds the maximum amount chargeable under income tax, then you have to maintain books of accounts & get them audited.

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3. I’m a doctor by profession. I opted for presumptive taxation scheme under section 44ADA. After declaring profit @50% of gross receipts, can I claim further deduction of expenses incurred for my profession?

  • No, you cannot claim any further deductions under section 44ADA. All the deduction under section 30 to 38 shall be deemed to have been allowed.

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4. I have opted for presumptive taxation scheme under section 44ADA. Do I have to pay advance tax?

  • Yes, you have to pay advance tax on or before 15th March of the financial year. If you fails to pay advance tax, interest will be charged on such amount as per under section 234B & section 234C.

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5. Amita is a dentist. She has total gross receipts of Rs. 49 lakh. She opted for presumptive taxation scheme under section 44ADA. She wants to know if she can claim depreciation for the medical equipment under section 44ADA.

  • No, in case of a person opting for presumptive taxation scheme, under section 44ADA, cannot claim deduction for depreciation. As under this section it is assumed that the deduction for depreciation has already been allowed and WDV of such asset shall be deemed to have been calculated.

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6.Shreya is an interior decorator. She has a total turnover of Rs. 40 lakh. Is she eligible to opt for presumptive taxation scheme under section 44ADA?

  • Since, Ms. Shreya is carrying a profession referred to in section 44AA (1) and has a total turnover less than Rs. 50 lakhs, she satisfies both the conditions of section 44ADA. So, she is eligible to opt for presumptive taxation scheme under section 44ADA.

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Set Off and Carry Forward of Losses

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What is the meaning of Set Off of Losses?

Set-off means adjustment of losses against the profit or income of same Financial Year.

A set off could be an intra head set off or inter head set off.

Intra head Set-off means loss from one source of income can be set off against income from another source but in the same head of income.

Inter head Set-off means loss under one head of income can be set off against income from another head of income but in same financial year.

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Given below is the detailed guide to set-off of losses

Head of Income Set-off
Same source under same head Other source under same head Inter head
Salary N/A N/A N/A
House property Yes Yes Yes

(max limit

Rs. 2, 00,000)

PGBP Non-Speculation Yes Yes Yes (Except Salary)
Speculation Yes No No
Owing & Maintenance race horses Yes No No
Specified business under section 35AD Yes No No
Capital Gain Short term Yes Yes No
Long term Yes No No
Other Income Yes Yes Yes

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What is the meaning of Carry-forward of Losses?

If the losses cannot be set-off in the same year due to inadequacy of eligible profits, then such profits are carried forward to the next financial year for adjustment against the eligible profits.

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Head of Income Carry Forward Set off
For Assessment years
Salary N/A N/A
House property 8 years Under Same head
PGBP Non-Speculation 8 years Under Same head
Speculation 4 years Under Same source
Owing & Maintenance race horses 4 years Under Same source
Specified business under section 35AD Indefinite years Under Same source
Capital Gain Short term 8 years Under Same head
Long term 8 years Under Same source

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Key Notes

  • Any loss under the head ‘Other income’ cannot be carried forward.
  • Loss under the head ‘Income from Salary’ is not possible.
  • In order to carry forward the losses, it is mandatory to file return of income on or before the due date of filing of Income tax return.
  • House property losses and unabsorbed depreciation can be carry-forward even if return is filed after the due dates.
  • In case return is filed after due dates, set-off and carry forward of losses of previous years are allowed but further carry forward of current year losses is not allowed.
  • As per the provision of section 72(2), brought forward business loss is to be set-off before setting off unabsorbed depreciation.
  • The order to be followed:
    • Current year depreciation/ capital expenditure on scientific research & expenditure on family planning, to the extent allowed.
    • Brought forward loss from business /profession
    • Unabsorbed depreciation.
    • Unabsorbed capital expenditure on scientific research.
    • Unabsorbed expenditure on family planning.
  • If income from a particular source is exempt from tax, then loss from such source cannot be set off against any other income which is chargeable to tax. (For Example: Share of profit from a firm)

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Frequently Asked Questions

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Query 1: I have a loss from house property of Rs. 2.5 lakhs as I have paid interest on home loan taken for purchase of my own house. I have earned salary income of Rs. 8 lakhs. Can I reduce my loss from house property against income from salary?

Ans: Yes, you can reduce your taxable income and set off the loss from house property but up to Rs. 2 lakhs only as inter head adjustment of loss under house property is allowed up to Rs. 2 Lakhs only and further, carry forward of Rs 50,000 is also not allowed. Therefore, now taxable income is Rs. 6 Lakhs (i.e. 8 Lakh – 2 lakh) and loss of Rs. 50,000 will lapse.

Query 2: I own two houses – one is self-occupied and other is rented. On self-occupied house property, I have paid interest of Rs. 2.5 lakhs on home loan taken for purchase of house. From rented house, I have earned rental income of Rs. 4 lakhs. Can I adjust loss on interest paid from self-occupied with my rental income?

Ans: Yes, loss on self-occupied house property can be adjusted against rental income but up to Rs. 2 Lakhs only, remaining loss of Rs. 50,000 will lapse.

Query 3: I have earned a rental income of Rs. 1,20,000/- p.a. and paid interest on home loan of Rs. 2,30,000/- taken for purchase of the same house. I have also earned business income of Rs. 5 lakhs during the year. How can I adjust the loss of Rs 2,30,000/- against income earned?

Ans: Firstly, your interest of Rs. 2,30,000/- will get adjusted against the rental income under same head and the remaining loss of Rs. 1,46,000/- [Rs. 1,20,000 – 36,000 (30% Standard Deduction) – 2,30,000] will get adjusted against business income as inter head adjustment is allowed up to Rs. 2 lakhs.

Query 4:  I have earned rental income of Rs. 5 lakhs and interest paid on home loan taken for rented property is Rs. 4 Lakhs. Can I adjust full interest of Rs 4 Lakhs against my rental income or up to Rs 2 Lakhs?

Ans: Limit of Rs 2 lakhs will not apply on interest paid on loan taken for rented property, this limit is for self-occupied property only. Hence, in case of rented property full interest of Rs 4 lakhs will get set-off against rental income.

Query 5: I have a loss from house property of Rs. 2.5 lakhs as I have paid interest on home loan taken for purchase of my own house. I have earned business income of Rs. 1.2 lakhs. Can I reduce my loss from house property against business income?

Ans: Yes, you can adjust your loss from house property against business income of Rs. 1.2 lakhs and remaining loss of Rs. 80,000/- will be carried forward to next year and can be adjusted against house property income only.

Query 6: I have earned a salary income of Rs. 65,000 and a loss from non-speculative business of Rs. 27,000?

Can I set-off the loss of non-speculative business with salary Income?

Ans: Business loss cannot be set off against salary income. So, the business loss of Rs. 27,000 cannot be set off against the salary income of Rs. 65,000 and hence, it will be carried forward to next 8 assessment years.

Query 7: I have made a gain from intraday trading of Rs. 1.5 lakhs and incurred a loss of Rs. 2.8 lakhs in my newly startup business. Can I adjust loss of Rs 2.8 lakhs with profit of Rs 1.5 Lakhs?

Ans: Yes, you can adjust your loss from normal business with speculative business. Hence, loss of Rs 2.8 lakhs can be adjusted with gain of Rs 1.5 lakhs and remaining will be carried forward to next 8 assessment years.

Query 8: I have incurred a loss from trading in future and options and earned a profit from my manufacturing business. Whether the loss from future and options is eligible to set off against manufacturing business?

Ans: Yes, as trading in future and options considered as non-speculative business (i.e. normal business) and loss from one normal business can be set off against another. Therefore, loss from future and options can be set off against gain from regular manufacturing business.

Query 9: I have a short-term capital gain of Rs. 50,000 and a long-term capital loss of Rs. 20,000. Can I claim a set-off of loss of long term with short term capital gain?

Ans: Long term loss can be set-off only from other long-term gain. We cannot set off long term capital loss against short term capital gain. So, the long-term capital loss of Rs. 20,000 cannot be adjusted for short term capital gain of Rs. 50,000. Hence, the same will be carried forward to next year.

Query 10: I have done both intraday and future & options trading this year and incurred loss in intraday and gain in F&O. can I set-off the losses with the profit?

Ans: No, in this case, set-off is not allowed because as per law, intraday trading is considered as the speculative business activity although trading in future & options is a normal business activity. Loss from speculative business can be set off against speculative profit only and hence, this loss should be carried forward to next 4 assessment years.

Query 11: I have sold debt mutual funds and made long term loss of Rs 60,000. I made short term gains of Rs 25,000 on sale of listed equity shares. Can I set off the long-term loss against the short-term capital gain and pay tax on the net amount.

Ans: You cannot set off the long-term loss against the short-term gain. You can carry forward the long term loss of Rs 60,000 for 8 successive years and need to pay tax on the entire short term capital gains of Rs 25,000.

Query 12: In case of change in the constitution of business, can the loss be carried forward by the reconstituted entity?

Ans: Generally, the person incurring the loss is only entitled to carry forward the loss in subsequent year(s). However, in certain cases of reconstitution of the business-like amalgamation, demerger, conversion of proprietary firm into company or conversion of partnership firm into company, etc., the reconstituted entity is entitled to carry forward the unadjusted loss of predecessor entity (provided that conditions specified in this regard are satisfied).

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Treatment of Interest on Home loan

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1.Allowed as deduction from Income from House Property

Interest on money borrowed can be deducted from the Income from House property i.e. the Rental Income. The same is allowed by the purview of section 24(b) of Income Tax Act, 1961.

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2. Are there any purposes defined for which money can be borrowed for the purpose of claiming a deduction?

Yes, the deduction of Interest paid can only be allowed if the loan is taken for the following specified purposes:

1. acquisition (purchase),

2. construction,

3. repairs,

4. renewal or reconstruction (renovation)

5. also, the interest on a loan taken to repay the original loan is also allowed for deduction.

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3. Is there any Limit for deduction?

Yes, the maximum amount allowed a deduction under section 24(b) is Rs. 2,00,000/- (Indian Rupees Two Lakhs Only)

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This limit of Rs. 2,00,000 (Indian Rupees Two Lakhs) applies to all mix of properties

Further, the following is also required to be noted:

Particulars Conditions
A.     If the loan was taken before April 01, 1999 Deduction cab be taken for a maximum amount of Rs 30,000 only.
B.     If the loan is taken on or after April 01, 1999 •       Where loan is taken for acquisition (purchase) or construction of house &

•       such construction or acquisition is completed in 5 financial years from when the loan was taken

Deduction can be taken for a maximum amount of Rs. 2,00,000.

•       Where loan is taken for the purpose of repairs, renewals, or reconstruction

Deduction can be taken for a maximum amount of Rs. 30,000

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Let us understand the above with example:

Mr. X is having 2 house properties, for the acquisition of both the properties he has taken the loans.

Particulars Nature of Occupation Interest paid during the Financial year Rent Received
Property 1 Self-Occupied 2,25,000
Property 2 Let out 2,50,000 1,80,000

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Calculation of Deduction of Interest:

Property Income from House Property Amount
Property 1 – Self-Occupied Annual Value                           NIL

Less: Interest                      2,25,000

Total                                   -2,25,000

-2,25,000
Property 2 – Let Out Annual Value                     1,80,000

Less: Interest                     2,50,000

Total                                   -70,000  

-70,000
Total -2,95,000
Net deduction (up to a maximum of Rs. 2,00,000) -2,00,000
Note: Rs. 70,000 will be allowed as carry forward of Losses under House Property

Also, it is to be noted that, the excess of Rs. 25,000 on self-occupied property will not be carry forward as loss under head house property)

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4. How the Interest on loan for the construction period is considered for deduction?

The deduction of the interest as mentioned above can only be claimed if the property is under the possession of the borrower and the construction is completed within the prescribed time of 5 years.

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There can arise the following two cases:

Particulars Remarks
Interest for Pre-Construction Period or Pre-Possession period Interest payable for pre-construction or per-possession period can be claimed as deduction over a period of 5 years in equal annual instalments starting from the year of acquisition/ possession or completion of construction.
Interest for previous year (financial year) in which possession was received or the construction was completed and onwards Interest relating to the year of acquisition or completion of construction can be fully claimed as deduction in that year irrespective of the date of completion/acquisition.

 

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5. Are there any other provisions where the deduction of Interest can be availed for loan taken for house property?

The answer to this is Yes. Please refer to the below mentioned provisions:

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1. Deduction for interest on loan borrowed for acquisition of house property by an individual [Section 80EE]

An individual who has taken a loan for the acquisition of residential house property from any financial institution. Interest payable on such loan would qualify for deduction under this section.

Condition to be met for such deduction:

  • Value of house ≤ Rs 50 lakhs
  • Loan borrowed ≤ Rs 35 lakhs
  • Loan should be sanctioned during the P.Y. 2016-17.
  • The benefit of deduction under this section would to be available till the payment of loan continues.
  • Deduction Allowed: the maximum deduction allowable is 50,000. This deduction is over & above the deduction of up to Rs. 2,00,000 allowed under section 24(b).

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2. Deduction in respect of interest payable on loan taken for the acquisition of residential house property. [Section 80EEA]

An individual who has taken a loan for the acquisition of residential house property from any financial institution. Interest payable on such loan would qualify for deduction under this section.

Conditions to be met for such deduction:

  • Stamp value of house ≤ 45 lakhs
  • The individual should not be eligible to claim deduction under section 80EE
  • Loan should be sanctioned by a financial institution during the Previous Year 2019-20.
  • The benefit of deduction is available from A.Y. 2020-21 and subsequent assessment years till the repayment of loan.
  • Deduction Allowed: The maximum deduction allowable is 1,50,000. This deduction is over & above the deduction allowed in section 24(b) of Rs. 2,00,000.

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All about new Form ITR 4 (Sugam) – F.Y. 2019-20 (A.Y. 2020-21)

 

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Who can file their return using ITR-4 for F.Y. 2019-20?

This Form is filed by an Individual/ HUF/ Firms (other than LLP) being a resident, whose total income is up to 50 Lakhs for the A.Y. 2020-21 and includes:

  • Income from Salary/ Pension; or
  • Income from One House Property (excluding cases where loss is brought forward from previous years); or
  • Income from Other Sources
  • Business Income under section 44AD and 44AE
  • Professional Income under section 44ADA

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Who cannot use ITR-4 for filing their Income Tax Return?

1.An Individual/HUF/Firm (other than LLP) who is either a Non-Resident or Not ordinary resident cannot use ITR – 4 for filing their Income Tax Return

2. An assessee having total income exceeding Rs 50 lakh

3. An individual who is either a director in a company or has invested in Unlisted Equity Shares

4. A firm who is a LLP (i.e. Limited Liability Partnership Firm) cannot file its return using this form

5. A taxpayer who has a brought forward/carry forward loss under any head of income cannot use ITR-4 to file his income tax return.

6. An individual/HUF/ Firm (Other than LLP) who has earned total income that includes the following:

  • Taxable capital gains
  • Individual/HUF/Firm who is liable for audit u/s 44AB of the Income Tax Act,1961
  • Owning assets (including financial interest in any entity) outside India if you are a resident, including signing authority in any account located outside India
  • Having foreign assets or foreign income.

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Structure of ITR-4 for A.Y. 2020-21

Form ITR -4 (Sugam) is divided into 5 Parts:

Part A covers General Information which includes:

  • PAN
  • Name
  • Date of Birth
  • Aadhar Number
  • Address
  • Mobile Number
  • Email ID
  • Status (Individual/HUF/Firm other than LLP)
  • Nature of employment
  • If revised return filed, then receipt no and Date of original return is also required.
  • Information like Return filed under which section 139(1)- Original Return, 139(4)- Belated Return, 139(9)- Defective Return etc.

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Part B consists of Gross Total Income which includes:

  • Income from salary/pension
  • Income from House Property
  • Income from other sources

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Part C covers Deductions and Total Taxable Income earned by the taxpayer:

  • Deduction u/s 80 C, 80D, 80G, 80TTA, 80TTB, etc covered under this part of ITR
  • Total Taxable Income earned on which tax is levied

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Part D consists of Computation of Taxable Income which include following details:

  • Tax payable on total Income
  • Rebate u/s 87A
  • Health and education cess @4%
  • Interest u/s 234A/B/C
  • Total tax paid
  • TDS deducted, etc.
  • Relief u/s 89
  • Fees u/s 234F
  • Detail of Bank Accounts held in India at any time during the Financial Year

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Schedules

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Verification

 

 

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Changes in Form ITR-4 (SUGAM) – AY 2020-21 (FY 2019-20)

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Who can file this form?

ITR-4 can be filed by an Individuals, HUFs, and Firms (other than LLP) being a resident having total income up to Rs. 50 lakhs and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE (i.e. Taxation of Income on presumptive basis).

ITR-4 cannot be used by an individual who is either a director of a company or has invested in unlisted equity shares anytime during the period for which ITR is filed.

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Changes in ITR 4 for AY 2020-21

1. In the new ITR Form, assesee should specify whether he is filing return of income under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?

If yes, following information need to be furnished:

  • Have you deposited amount or aggregate of amounts exceeding Rs. 1 Crore in one or more current account during the previous year? (Yes/No) (If Yes specify Amount)
  • Have you incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or for any other person? (Yes/ No) (If Yes specify Amount)
  • Have you incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh on consumption of electricity during the previous year? (Yes/No) (If Yes specify Amount)

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2. In new form, Changes made in Nature of Employment section and following options are provided to choose from:

  • Central Govt.
  • State Govt.
  • Public Sector Undertaking
  • Pensioners
  • Others
  • Not Applicable (e.g. Family Pension etc.)

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3. Individuals who are having carry forward and set off of losses, are required to file ITR-3 or 5 and is not eligible to file their return using ITR-4.

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4. Under ‘deduction’ section, assesee should clearly mention that, Whether, he had made any investment/ deposit/ payments between 01.04.2020 to 30.06.2020 for the purpose of claiming any deduction under Part B of Chapter VIA? If Yes, specify details in Schedule DI.

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5. Earlier in ITR-4, there is a separate schedule that an assesee needs to fill for claiming Deduction u/s 80G named ‘Schedule 80G’ is now deleted in new ITR-4.

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Taxation of Salary Income from 2 (Two) Employers in one financial year

.form 16 not received previous employer

Form 16 is an Income Tax Form or Certificate for tax deduction issued by an employer to its employees when he deducts tax from the employee’s salary. (Click Here to read in detail)

Sometimes, a situation may arise where you as an employee had worked with more than one employer in a particular Financial Year. In that case, you need to be aware and educated about the fact that, how to deal with salary income from 2 employers in one Financial Year?

Ideally, at the end of the financial year you will receive Form 16 from both the employers for the respective time period you worked with them. Doubts or confusion may arise when you are filing your Income Tax Return. We have tried to simplify the process by categorising it in various scenarios (cases). Let’s find out how you can deal with this situation in an easy manner:

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Case 1: When you have received Form 16 from both the employer – Ideal Situation

This is the most hassle-free case, when you have received Form 16 from both the employer. You just need to add Income from 2 employers in your Income Tax Return under the head ‘Income from salary’ and the details provided in both the Form 16s as it is. Firstly, add details of employer with whom you have worked in the starting period of the year and then add details of the later one.

 If the salary details from your previous employer are already added by your later employer in Part – B of his Form 16, you just need to verify that the details are correct and use the Form 16 of the later employer to file your return of income.

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Case 2: When you have received Form 16 from any one of them – Practical Aspect

If you have received Form 16 from your current employer only

If you have received Form 16 from your later employer only, and he has considered your previous employment details in Form 16 on the basis of information provided by you, you can file your return on the basis of this Form 16 only. But if you didn’t provide him your previous salary details and hence the same is not considered in your Form 16, you need to add all the details in your return separately on your own.

If you have received Form 16 from your previous employer only

This is a very rare situation but if you have received Form 16 from your previous employer only, you can ask your later employer to provide Form 16 and if they didn’t, you have to file your income tax return by adding all the details on your own.

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Case 3: When none of the employer had provided you Form 16 – Practical Aspect

If none of your employer has provided you with Form 16, you need to enter all the details in your Income tax return on your own. In this case, you have to calculate all deductions like HRA etc.

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Note: Benefit of slab rate and Deduction u/s 80C, 80D ,etc.  should be considered only once and not per Form 16 basis. 

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Disclaimer: The above mentioned cases are illustrative and not exhaustive. This article is only for discussing general issues and hereby we do not express any opinion or give any consultation in what so ever manner understood. The cases may differ from individual to individual. We recommend you to take expert advice depending upon your particular case.

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Changes in ITR – 1 – Sahaj – for FY 2019-20 (AY 2020-21)

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Who can file this form?

ITR-1 can be filed by an individual being a resident (other than not ordinarily resident) having total income up to Rs. 50 lakhs, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income up to Rs. 5000.

ITR-1 cannot be filed by an individual who is either a director of a company or has invested in unlisted equity shares.

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Changes in ITR 1 for AY 2020-21

1. In the new ITR Form, assesee should specify whether he is filing return of income under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?

If yes, following information need to be furnished:

  • Have you deposited amount or aggregate of amounts exceeding Rs. 1 Crore in one or more current account during the previous year? (Yes/No) (If Yes specify Amount)
  • Have you incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or for any other person? (Yes/ No) (If Yes specify Amount)
  • Have you incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh on consumption of electricity during the previous year? (Yes/No) (If Yes specify Amount).
  • .

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2. In new form, Changes made in Nature of Employment section and following options are provided to choose from:

  • Central Govt.
  • State Govt.
  • Public Sector Undertaking
  • Pensioners
  • Others
  • Not Applicable (e.g. Family Pension etc.)

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3. Individuals who are having carry forward and set off of losses, are required to file ITR-2 and is not eligible to file their return using ITR-1.

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4. Under deduction section, assesee should clearly mention that, Whether, he had made any investment/ deposit/ payments between 01.04.2020 to 30.06.2020 for the purpose of claiming any deduction under Part B of Chapter VIA? If Yes, specify details in Schedule DI. This section is added to facilitate the individuals who made the investments during the period April 01, 2020 to June 30, 2020 and could not do it before March 31, 2020, due to COVID – 19 lockdowns.

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