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‘Is money back sum received taxable?’

Do you have any personal income tax query?

Please mail your queries at [email protected] with the subject line ‘Ask Mihir’.

Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, will answer your queries.

Pravin M T: A company invests in stocks on 1.5.21 for Rs 30 lakh, the market value of those equity shares is 20 lakh as on 31.3.22. Can a company debit profit loss a/c on 31.3.22 for 10 lakh?

Mihir Tanna: In case of Investment in equity shares, it is shown at cost in the balance sheet and notional loss/gain is not allowed as deduction under Income Tax. For accounting entries and impact in the books, please consult your statutory auditor who can advise after considering applicable accounting standards.

Kannan Thangaraj: I have taken insurance with Kotak Mahindra about five years back sum assured being Rupees four lakh fifty thousand only. I pay yearly premium of Rs 50,500. I received in this financial year money back of Rs 60,000. I want to know whether this sum received as money back is taxable.

Mihir Tanna: Where the premium paid, is more than 10% of the sum assured, amount received from a life insurance policy, is fully taxable. Further, in case of ULIP plans, if policy is acquired after 1st February 2021 and single/aggregate premium paid is more than 2,50,000; amount received under policy is taxable. 

In your case, if you fulfill both the conditions, amount received will not be taxable. 

Vivek Etelvino Rodrigues: My mother, a housewife and a non-tax payee senior citizen had only one FD on her name from 10.02.2011 to 09.02.2019. of Rs 90,136 with a maturity value of Rs 2,06,538 at 10.5%. However, when the FD was automatically renewed the bank renewed it for only Rs 1,76,550. She did not realise it and this year she realised it and approached the Bank. The Bank says that they cut the amount as TDS as she had not submitted her PAN as per the rules then. She had no PAN card then but subsequently she did get a PAN card. Can she get the deducted amount and if so how? 

Mihir Tanna: A refund of TDS is possible only by way of filing an Income Tax Return within the specified due date. It is understood that the bank had reinvested the FD maturity amount (net of TDS) in February 2019 itself, ie, in FY 2019-20 and the due date of filing Return/ belated return for the said year has already passed long. Therefore, it is not possible to file a Return for FY 19-20, hence, no refund can be claimed. 

However, in case of substantial amount of refund, it is advisable to file condonation application with jurisdictional Commissioner of Income Tax who can allow you to file revise return if reason for non-filing of correct income tax return is reasonable/genuine.

Read more of Mihir Tanna’s responses here.

Please mail your queries at [email protected] with the subject line ‘Ask Mihir’.

Note: The questions and answers in this advisory are published to help the individual asking the question as well the large number of readers who read the same.

While we value our readers’ requests for privacy and avoid using their actual names along with the question whenever a request is made, we regret that no question will be answered personally on e-mail.

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