Withholding Tax in India

Any payer deducting an amount directly from its payee’s earning is referred to as Withholding tax. By law, the payer is obliged to deduct the amount at the time of making the payment on account of a Non-Resident Individual. Let’s learn about withholding taxes in further detail.

What is Withholding tax

Withholding tax is similar to Tax Deducted at Source (TDS). Withholding tax also known as retention tax is another terminology used for TDS. It is deducted by the payer directly from its payee’s earning. This tax is then deposited as part of the Non- resident individual’s tax liability to the Central government of India. The central government of India is an official body to levy and collect taxes.

For better understanding, TDS has to be paid by Residents, and withholding tax is to be paid by Non-resident individuals only on income earned in India.

Example: Mr. Rohan is an NRI and is working as a freelancer with Mr. Shah & Co. in India. Mr. Rohan has earned INR 95000 by providing his services. Now, while making the payment Mr. Shah & Co. will credit INR 90000 to Mr. Rohan’s account and deduct INR 5000 as withholding tax.

Rates of Withholding tax in India

Following are the rates applicable for Non- Resident Indian individuals:

  • 20% Interest rate is applicable for dividends paid by domestic companies
  • 10% rate is applicable for technical services are charged
  • 10% rate is applicable for other services
  • Individuals are charged 30% rate of the Income
  • Companies are charged 40% rate of the Income
  • No tax charged for royalties

Note: The above stated rates are applicable on those countries with whom India does not have a double taxation avoidance agreement.

Process of doing an assessment for Non-resident Indians

Assessment of Non- Resident Indians can be done by an agent or even directly. A person who is considered as ‘agent‘ of a non-resident assessee is as under:

  • Employee or trustee of a Non-resident Indian
  • Any individual who has any business connection with a Non-resident
  • Any person through whom a Non-resident is receiving any income
  • Any person who has acquired or purchased any capital asset in India from a Non-resident.

Due date of Filing returns

The returns for withholding of tax are filed quarterly, and it includes details about every payee and amount deducted for that particular quarter.

Following are the dates of filing the returns for every quarter:

Quarter Months Due Dates
Q1 April – June July 15th, 2021
Q2 July – September October 15th, 2021
Q3 October – December January 15th, 2021
Q4 January – March  May 15th, 2021

Due date of depositing payment

Following are the due dates of making payments of withholding tax:

Month End of Quarter Withholding Tax Payments Due Date – Government  Withholding Tax Payments Due Date – Non- Government 
January 31st March 7th February 7th February
February 31st March 7th March 7th March
March 31st March 7th April 30th April
April 30th June 7th May 7th May
May 30th June 7th June 7th June
June 30th June 7th July 7th July
July 30th September 7th August 7th August
August 30th September 7th September  7th September 
September 30th September 7th October 7th October
October 31st December 7th November 7th November
November 31st December 7th December 7th December
December 31st December 7th January 7th January

FAQs

What is the difference between TDS and withholding tax?

TDS is applicable while making payments to Indian Citizens while Withholding tax is applicable while making payments to foreign individuals.

What is the rate of withholding tax in India?

Following are the rates applicable for Non- Resident Indian individuals:
1. 20% Interest rate is applicable for dividends paid by domestic companies
2. 10% rate is applicable for technical services are charged
3. 10% rate is applicable for other services
4. Individuals are charged a 30% rate of the Income
5. Companies are charged 40% rat of the Income
6 . No tax charged for royalties

When should I make payment for withholding tax?

Withholding tax payment has to be done on the 7th of every month. While returns are to be filed within 30 days from the ending of every quarter.

Sharekhan: Create an account and Log in, Download ledger, Tax P&L Report and Contract note

To understand your trading activity and the income tax compliances, you need certain documents like Tax P&L, Contract notes, Holding Statement, etc. But, before you get any of these documents you first need to have a Sharekhan Demat account and log in.

This article will guide you through the following:

How to Create and Log in to Sharekhan?

  1. Visit the Sharekhan website

    Click on Open an account. You can access it here.

  2. Click on Open trading account

    As seen below:

  3. After that, fill in your details

    Including:
    -Name
    -Email id
    -Mobile number
    -Location
    -Pincode

  4. Next, click on Open trading account

    As seen below:

  5. Online process of account opening is completed

    Finally, the process is offline from here.

  6. A sales representative will shortly contact you

    After that, will require documents such as:
    -Self-attested PAN
    -Self-attested Aadhaar
    -Passport size photo
    -Canceled cheque or bank passbook to link with your account

  7. Finally, once your documents get processed, your account will get activated.

    You will receive a notification for the same.

8. Sharekhan login

Once your account is activated, navigate to the website and enter your user id and password and click on login.

How to download Ledger for Sharekhan traders?

Here’s how you can download the ledger from your account:

  • Step 1: Log in to Sharekhan portal
  • Step 2: Click on Reports
  • Step 3: Select the ledger of any segment that you want to view. Eg: Equity Ledger Summary
  • Step 4: From the options, click on Equity Ledger Summary
  • Step 5: Select the necessary filters. Click on Show. You can now view your Ledger summary.
  • Step 6: Click on the excel sheet to download the ledger. You can view it from your PC

How to download Tax Profit and Loss Report?

  • Step 1: Log in to the Sharekhan portal and login to your account.
  • Step 2: Search for Scrip summary. You can do this from the search bar. You can view the scrip summary separately for all the segments i.e Equity or F&O.
  • Step 3: Now you can now view your Scrip summary from the dashboard
  • Step 4: Click on the Excel sheet. Click on download your scrip summary

How to download Contract notes for Sharekhan traders?

  • Step 1: Visit the Sharekhan portal and click on the “Login/Trade” option
  • Step 2: Next, you will be redirected to the login page. Enter the login ID/e-Mail ID and click on the “Next” option. Then fill in the “Membership Password” in the respective field.
  • Step 3: After you log in, click on the “Reports” option and select this from the dashboard
  • Step 4: Next, click on the “Contract Tracker” option from under the particular column. Select which Contract Note you wish to view/download.

FAQs

How does the Tax profit and Loss Statement help me?

This statement is used to calculate your Tax liability. Therefore, it is needed to file ITR 3.

What is the difference between Trading and Demat account?

A Demat account holds securities and certificates of stocks, shares, etc electronically while a Trading account lets you buy or sell those securities in the stock market.

Is Trading Turnover same as Contract Turnover?

No. The Contract Turnover is the sum of the purchase value and sales value. It is not considered for income tax purposes. However, the Trading Turnover or Business Turnover is the absolute profit i.e. sum of positive and negative differences. Hence, this turnover is considered to determine the applicability of the tax audit and the applicable ITR form. Therefore, Trading Turnover is different from Contract Turnover.

Kotak Securities: Create an account and Log in, Download Holding Statement, Tax P&L Report, and Ledger

To understand your trading activity and the income tax compliances, you need certain documents like Tax P&L, Ledger, Holding Statement, etc. But, before you get any of these documents you first need to have a Kotak Securities Account and log in.

This article will guide you through the following:

How to Create and Log in to Kotak Securities?

Here’s how you can open a trading account online with Kotak Securities by following these steps:

  1. Visit the Kotak Securities website.

    You can access it from here.

  2. Fill in your details.

    Such as your Name, Mobile Number and City.

  3. Click on Open an account now

    As seen below:

  4. A sales representative from Kotak Securities will contact you on your registered number.

    They will take it from there.

  5. During the IPV there are documents required by the sales representative.

    These include:
    – Self-attested PAN copy;
    – Self-attested Aadhaar copy;
    – Passport size photo;
    – Bank account details that are to be linked with the Demat account;
    – And, the signature of the account holder will also be required.

  6. Once these documents are verified your account will open.

    You will receive a confirmation for the same.

  7. Kotak Securities login

    Once your account is activated you can navigate to the website and log in

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How to download Holding Statement for Kotak traders?

Here’s how you can download the Holding Statement from your account:

  • Step 1: Visit the Kotak Securities portal and log in by entering the required details.
  • Step 2: Click on Reports. Select the DP Holdings option from the dashboard
  • Step 3: Next, click on the download option. It is located at the bottom of the page
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How to download Tax Profit and Loss Report?

  • Step 1: Visit the Kotak Securities portal and log in to your account by entering the required details.
  • Step 2: Next, the top bar go to “Reports“. Select “Trades”
  • Step 3: The Trading report is now displayed. There is an option to download the report. To download click on the “Down arrow” and choose “Excel
  • Step 4: The file will be downloaded on your PC under the Downloads section.
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How to download Ledger for Kotak securities traders?

  • Step 2: Go to Services. Next, click on Account services
  • Step 3: Click on View my ledger
  • Step 4: Select the necessary filters and Click on Go. Click on NSE for details
  • Step 5: You can now view your Ledger Entries
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FAQs

How does the Tax profit and Loss Statement help me?

This statement represents your trading profits and losses and is used to calculate your Tax liability. Therefore, it is needed to file an ITR 3.

What is the difference between Trading and Demat account?

Demat accounts hold securities and certificates of stocks, shares, etc electronically while a Trading account lets you buy or sell those securities in the stock market.

Can I have 2 trading accounts?

Yes. An Individual can have as many trading accounts as they want. Additionally, you can link the same bank account with different trading accounts. However, you can’t have multiple accounts linked with the same broker.

Compliance Portal: Tax liability for Commodity transaction

A taxpayer can receive a notice/query from the ITD regarding their commodity transactions. Thus, taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Hence, taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or even if the ITR is not filed in an AY where there is a potential tax liability pending.
  2. Details provided by the taxpayer and information received by the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.
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Commodity transactions are similar to Securities transactions. Transactions that get settled in an alternate method than by actual agreed upon delivery are treated as Speculative transactions. Speculative transactions are exempted from tax. however, some Speculative transactions an eligible in respect of trading in commodity derivatives carried out in a recognized association, which is chargeable to commodities transaction tax is not considered a speculative transaction.

Business Income u/s 28 to 43C and Income from capital gains u/s 45 to 55A can be levied on commodity transactions.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. Additionally, this response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of Commodity transactions’ tax liability

Code Description Response
A1 Total receipts as per taxpayer pertaining to the above information Amount
A2 Less: Amount relating to another year/PAN  PAN year-wise list
A3 Less: Amount covered in other information Amount
A4 Less: Exemption/Deduction/Expenditure/ Set off of Loss Exemption/Deduction wise list
A5 Income/Gains/Loss (A1-A2-A3-A4) Computed

A1- Total receipts:

The gross value of transactions in commodities should certainly be included and a final amount needs to be mentioned.

A2- Amount relating to other year or PAN:

 If part of the receipts relates to someone else’s PAN or is considered for some other year then the List of details of such receipts are to be mentioned as per the table below:

A3- Amount repeatedly covered:

 If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. Hence, this will nullify the repeated Income/Gains/Loss covered.

A4- Exemption/Deduction/Expenditure/Set off of loss:

This section has to include gross salary and a list of all the available allowances which are exempt. Therefore, the taxpayer needs to select the correct category from the drop-down list as under:

  • Cost of acquisition u/s 48.
  • Expenditure incurred wholly and exclusively in connection with transfer u/s 48.
  • Deductions from capital gains u/s 54EC/54EE/54F.
  • Set off of Loss.
  • Others.

The details are to be submitted as per the table mentioned below:

A5- Income/Gain/Loss:

This section includes the self-computation of commodity transactions chargeable to tax A5=(A1-(A2+A3+A4)). If your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.

FAQs

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will certainly be pushed to the compliance portal for e-verification. Additionally, Email and SMS will be sent to the taxpayer informing about the issue raised. Then, the taxpayers need to respond to those issues raised.

Is it necessary to Compliance Portal? What happens if I don’t log in?

Yes, it is certainly advisable to log in to the compliance portal. However, if a taxpayer doesn’t login he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. And thereafter, the taxpayer needs to respond to the additional query request as well.

Compliance Portal: Tax liability from Investment in Securities

When a taxpayer earns any income through investment in securities they incur a tax liability for these transactions. This income can be considered as Business Income or Capital gains. This is determined depending upon the nature of security, nature of the transaction, the period of holding, etc. Some of such transaction types are mentioned below:

  • Speculative transactions: Transactions in which a contract for the purchase/sale of commodity or scripts is executed not by actual delivery but by an alternative method is treated as speculative transactions.
  • Business Income: Income generated by dealing in shares is treated as business income.
  • Long-term capital gain: Income generated from dealing in equity shares, equity-oriented mutual funds or units of a business trust that is exempt under section 10(38) provided the transaction is subjected to Securities Transaction Tax. Tax is chargeable @20% on other long-term capital gains. However, in the case of listed securities, tax can be paid @10% on gains computed without indexation. Short-term capital gain in such cases is chargeable @15%.
  • Short term capital gains: In case of other short-term capital gains, tax is leviable as per the regular income slabs.
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Taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or The ITR is not filed in the given assessment year and has potential tax liability pending.
  2. Details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. The response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of tax liability on Investment in securities

Code Description Response
A1 Total receipts as per taxpayer pertaining to the above information Amount
A2 Less: Amount relating to another year/PAN  PAN year-wise list
A3 Less: Amount covered in other information Amount
A4 Less: Exemption/Deduction/Expenditure/ Set off of Loss Exemption/Deduction wise list
A5 Income/Gains/Loss (A1-A2-A3-A4) Computed

A1- Total receipts:

Any gross value of the transaction in securities should be included and a final amount should be mentioned.

A2- Amount relating to other year or PAN:

 If part of the gross receipts relates to someone else’s PAN or is considered for some other year then the List of details of such receipts are to be mentioned as per the table below:

A3- Amount repeatedly covered:

 If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. This will nullify the repeated Income/Gains/Loss covered.

A4- Exemption/Deduction/Expenditure/Set off of loss:

This section has to includes a list of all the available allowances which are exempt. The taxpayer needs to select the correct category from the drop-down list as under:

  • Exempt Long-term Capital Gain on shares u/s 10(38)
  • Cost of acquisition u/s 48.
  • Expenditure incurred wholly and exclusively in connection with transfer u/s 48.
  • Deductions from capital gains 54EC/54EE/54F
  • Set off of Loss
  • Others

The details are to be submitted as per the table mentioned below:

A5- Income/Gain/Loss:

This section includes the self-computation of securities transactions chargeable to tax A5=(A1-(A2+A3+A4)). If your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.

FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What are the different types of transactions in securities?

Speculative transactions: Transactions in which a contract for the purchase/sale of commodity or scripts is executed not by actual delivery but by an alternative method is treated as speculative transactions.
Business Income: Income generated by dealing in shares is treated as business income.
Long-term capital gain: Income generated from dealing in equity shares, equity-oriented mutual funds or units of a business trust that are exempt under section 10(38) provided the transaction is subjected to Securities Transaction Tax. Tax is chargeable @20% on other long-term capital gains. However, in the case of listed securities, tax can be paid @10% on gains computed without indexation. Short-term capital gain in such cases is chargeable @15%.
Short term capital gains: In case of other short-term capital gains, tax is leviable as per the regular income slabs.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. The taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will be pushed to the compliance portal for e-verification, Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.

Compliance Portal: Tax liability on Expenditure

A query by the ITD may be raised on expenditures like family functions, foreign travel, foreign education, expensive hotels/restaurants, etc. These are some expenses where income gets utilized. The taxpayers who have spent a significant amount on such expenditures have to quote their PANs in such transactions. Some of the above-mentioned expenses are to be reported as well through AIR or SFT. Expenditures are an indicator of assessee’s lifestyle and standard of living. Any unexplained expenditure can also be deemed to tax in hands of the assessee for that Financial Year.

Taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or The ITR is not filed in the given assessment year and has potential tax liability pending.
  2. Details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. The response has to be submitted online by logging into the compliance portal.

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Verification issue in the computation of tax liability from Expenditure

Code Description Response
A1 Correct Information Value Amount + Remarks
A2 Out of earlier income or savings Amount + Remarks
A3 Out of receipts exempt from tax Exempt income-wise list
A4 Received from identifiable persons (without PAN) PAN wise list
A5 Received from identifiable persons (without PAN) Person wise list 
A6 Received from un-identifiable persons Nature of transaction wise list 
A7 Others Amount + Remarks
A8 Unexplained amount A1- (A2+A3+A4+A5+A6+A7)

A1- Correct Information value

The total of all the amount paid for the purchase of the property has to be mentioned here. The purchase amount and all the expenses like stamp duty etc. In the case of co-ownership, the taxpayer should mention his/her share of investment and give details like name, PAN and share of other co-owners under the remarks section.

A-2 Out of earlier income or savings

If any part of the investment or expenditure is made out of earlier income or savings then it should be mentioned with the amount under this category. Suitable remarks are also required under the remarks section.

A3- Out of receipts exempt from tax

Available exemptions are listed below in the drop-down list. After choosing the relevant exemption the value of the receipt will be determined.

  • Interest income u/s 10.
  • Dividend income u/s 10(34)
  • Long-term capital gains on shares u/s 10(38).
  • Agricultural income u/s 10(1).
  • Share in the total income of firm/AOP etc. u/s 10(2A)
  • Income is not taxable in India.
  • Others

If this field is selected you will be displayed the following rows:

A4- Received from identifiable persons (with PAN)

If any amount is received from an identifiable person who holds a valid PAN, then his/her details are to be mentioned as per the following table:

The Transaction Type consists of:

  • Sales
  • Loan Received
  • Loan Repayment
  • Gift Received
  • Donation Received
  • Other Receipt.

The Transaction Mode consists of two options i.e ‘Cash’ and ‘Non-cash’. More rows can be added by clicking on the button ‘Add Row’. Suitable remarks are to be provided under the remarks section.

A5- Received from identifiable persons (without PAN)

If any amount is received from an identifiable person who doesn’t hold a PAN, then his/her details are to be mentioned as per the following table:

A6- Received from un-identifiable person

If any amount is received from an unidentifiable person, then his/her details are to be mentioned as per the following table:

A7- Others

If any amount which was not covered in any of the above-mentioned categories then it should be mentioned here. Suitable remarks are to be provided under the remarks section.

A8- Unexplained amount

This section computes a figure (A1 – (A2+A3+A4+A5+A6+A7)), for which no explanation is provided.

FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. The taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will be pushed to the compliance portal for e-verification, Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.

Compliance Portal: Tax liability on Cash Deposits

The taxpayers who have a large sums of cash deposits have to file the Income Tax Return. As per rule 114B, disclosure of PAN is mandatory in some transactions if cash of Rs.50,000/- or more is involved. Section 269SS has been further amended to include amounts received on the sale of a property. Statement of Financial Transaction (SFT) is required to be filed in respect of specified cash transactions.

Taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or The ITR is not filed in the given assessment year and has potential tax liability pending.
  2. Details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. The response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of tax liability for Cash Deposits

Code Description Response
A1 Correct Information Value Amount + Remarks
A2 Out of earlier income or savings Amount + Remarks
A3 Out of receipts exempt from tax Exempt income-wise list
A4 Received from identifiable persons (without PAN) PAN wise list
A5 Received from identifiable persons (without PAN) Person wise list 
A6 Received from un-identifiable persons Nature of transaction wise list 
A7 Others Amount + Remarks
A8 Unexplained amount A1- (A2+A3+A4+A5+A6+A7)

A1- Correct Information value

The total of all the amount paid for the purchase of the property has to be mentioned here. The purchase amount and all the expenses like stamp duty etc. In the case of co-ownership, the taxpayer should mention his/her share of investment and give details like name, PAN and share of other co-owners under the remarks section.

A-2 Out of earlier income or savings

If any part of the investment or expenditure is made out of earlier income or savings then it should be mentioned with the amount under this category. Suitable remarks are also required under the remarks section.

A3- Out of receipts exempt from tax

Available exemptions are listed below in the drop-down list. After choosing the relevant exemption the value of the receipt will be determined.

  • Interest income u/s 10.
  • Dividend income u/s 10(34)
  • Long-term capital gains on shares u/s 10(38).
  • Agricultural income u/s 10(1).
  • Share in the total income of firm/AOP etc. u/s 10(2A)
  • Income is not taxable in India.
  • Others

If this field is selected you will be displayed the following rows:

A4- Received from identifiable persons (with PAN)

If any amount is received from an identifiable person who holds a valid PAN, then his/her details are to be mentioned as per the following table:

The Transaction Type consists of:

  • Sales
  • Loan Received
  • Loan Repayment
  • Gift Received
  • Donation Received
  • Other Receipt.

The Transaction Mode consists of two options i.e ‘Cash’ and ‘Non-cash’. More rows can be added by clicking on the button ‘Add Row’. Suitable remarks are to be provided under the remarks section.

A5- Received from identifiable persons (without PAN)

If any amount is received from an identifiable person who doesn’t hold a PAN, then his/her details are to be mentioned as per the following table:

A6- Received from un-identifiable person

If any amount is received from an unidentifiable person, then his/her details are to be mentioned as per the following table:

A7- Others

If any amount which was not covered in any of the above-mentioned categories then it should be mentioned here. Suitable remarks are to be provided under the remarks section.

A8- Unexplained amount

This section computes a figure (A1 – (A2+A3+A4+A5+A6+A7)), for which no explanation is provided.

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FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. The taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will be pushed to the compliance portal for e-verification, Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.

Compliance portal: Tax liability from Sale of Immovable property

The capital gain arising from the sale of immovable property of a capital asset is subjected to tax. Capital Gain tax u/s 45 of the Income Tax Act is to be levied on the sale. However, Capital gains are of two types i.e long term and short term. The tax liability will differ depending upon the type of capital gain.

Taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or The ITR is not filed in the given assessment year and has potential tax liability pending.
  2. Details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. The response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of tax liability from Sale of Immovable Property

Code Description Response
A1 Total receipts as per taxpayer pertaining to the above information Amount + Remarks
A2 Value adopted or assessed for the purpose of payment of Stamp Duty Amount + Remarks
A3 The value is taken for computation of capital gains Amount + Remarks
A4 Less: Amount relating to another year/PAN  PAN year-wise list + Remarks
A5 Less: Amount covered in other information Amount + Remarks
A6 Less: Exemption/Deduction/Expenditure/ Set off of Loss Exemption/Deduction wise list + Remarks
A7 Income/Gains/Loss (A1-A2-A3-A4) Amount + Remarks

A1- Total receipts as per the taxpayer pertaining to the above information.

The gross value of the receivables/received payments against the transfer of the property is to be mentioned.

A2- Value adopted or assessed for the purpose of payment of stamp duty

The amount of stamp duty paid or payable is to be mentioned here. If there is no stamp duty value then the field should be left blank. As per section 50C or 43CA, if the sale amount is lower than the value taken for payment of stamp duty is to be considered for computing income.

A3- Value taken for computation of Capital Gains.

The value that has been considered for the computation of income is to be mentioned. If value taken for payment of stamp duty is higher than the sale amount and it is claimed that the former value exceeds the fair market value, then appropriate remarks are to be stated under the remarks section.

A4- Amount relating to another year/PAN.

If part of the income/receipts relates to someone else’s PAN or is considered for some other year then the List of details of such income is to be mentioned as per the table below:

A5- Amount repeatedly covered:

 If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. This will nullify the repeated Income/Gains/Loss covered.

A6- Exemption/Deduction/Expenditure/Set off of loss:

This section has to include a list of all the available allowances which are exempt. The taxpayer needs to select the correct category from the drop-down list as under:

  • Agricultural Land outside specified limits
  • Capital Gains:
    • Cost of Acquisition u/s 48
    • Cost of Improvement u/s 48
    • Expenditure incurred wholly and exclusively in connection with transfer u/s 48
    • Deductions from Capital Gains u/s 54/54B/54D/54EC/54EE/54F/54G/54GA/54GB
  • Set off of Loss
  • Others

The details are to be submitted as per the table mentioned below:

A7- Income/Gain/Loss:

This section includes the self-computation of income from house property chargeable to tax A5=(A1-(A2+A3+A4)). If your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.

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FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. The taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will be pushed to the compliance portal for e-verification, Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.

Compliance Portal: Tax liability for House Property

If you have paid tax incorrectly on your house property you might receive a query to correct it. Hence, taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three instances:

  • Not filed ITR: ITR is not filed for the given assessment year and has a potential tax liability.
  • Mismatch in Details: Even if the details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  • Reporting of Significant Transactions: The Income Tax department has details of significant transactions during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

The basis of calculating Income from house property u/s 23(1) of the Income Tax Act is through calculating the annual value. For instance, the annual value of house property is the determination of rent received or the amount of rent which property can potentially earn if let out, whichever is higher.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. Additionally, the response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of tax liability on House Property

Code Description Response
A1 Total receipts as per taxpayer pertaining to the above information Amount
A2 Less: Amount relating to another year/PAN  PAN year-wise list
A3 Less: Amount covered in other information Amount
A4 Less: Exemption/Deduction/Expenditure/ Set off of Loss Exemption/Deduction wise list
A5 Income/Gains/Loss (A1-A2-A3-A4) Computed

A1- Total receipts as per the taxpayer pertaining to the above information.

The gross value of the property can be let out. However, if the taxpayer has not received any rental payment they can show the amount as 0. But, suitable remarks are to be submitted under the remarks section.

A2- Amount relating to another year/PAN.

If part of the income/receipts relates to someone else’s PAN or is considered for some other year then the List of details of such income is to be mentioned as per the table below:

A3- Amount repeatedly covered:

 If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. Hence, this will nullify the repeated Income/Gains/Loss covered.

A4- Exemption/Deduction/Expenditure/Set off of loss:

This section has to certainly include a list of all the available allowances which are exempt. The taxpayer needs to then select the correct category from the drop-down list as under:

  • Amount of rent which cannot be realized u/s 23.
  • Tax paid to local authorities u/s 23
  • Deduction under section 24(a) @30%
  • Interest payable on borrowed capital u/s 24(b)
  • Set off of Loss
  • Others

The details are to be submitted as per the table mentioned below:

A5- Income/Gain/Loss:

This section includes the self-computation of income from house property chargeable to tax A5=(A1-(A2+A3+A4)). If your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.

FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is certainly advisable to log in to the compliance portal. However, if a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further clarification from the taxpayer. Therefore, the taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues then it will be pushed to the compliance portal for e-verification. For instance, Email and SMS will be sent to the taxpayer informing about the issue raised. Then the taxpayers then need to respond to those issues raised.

Compliance Portal: Tax liability for Income from Other Sources

Income that doesn’t get covered in any major Income heads gets covered under Income from Other Sources. Hence, all income except income from house property, capital gain, business, and professional income are covered under this head u/s 56 and 57 of the Income Tax Act.

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In addition, taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:

  1. Not filed ITR or even if the ITR is not filed in the given assessment year but it has potential tax liability pending.
  2. Similarly, if the details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
  3. Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.

Taxpayers who have received any such verification issue needs to submit a response on those issues raised. Additionally, the response has to be submitted online by logging into the compliance portal.

Verification issue in the computation of tax liability for income from other sources

Code Description Response
A1 Total receipts as per taxpayer pertaining to the above information Amount
A2 Less: Amount relating to another year/PAN  PAN year-wise list
A3 Less: Amount covered in other information Amount
A4 Less: Exemption/Deduction/Expenditure/ Set off of Loss Exemption/Deduction wise list
A5 Income/Gains/Loss (A1-A2-A3-A4) Computed

A1- Total receipts as per the taxpayer pertaining to the above information.

The gross value of the receivables/received payments as other source income are to be mentioned.

A2- Amount relating to another year/PAN.

If part of the income/receipts relates to someone else’s PAN or is considered for some other year, then the List of details of such income is to be mentioned as per the table below:

A3- Amount repeatedly covered:

 If any amount is mistakenly covered twice then it should be mentioned under the Remarks section of the previous table. Hence, this will nullify the repeated Income/Gains/Loss covered.

A4- Exemption/Deduction/Expenditure/Set off of loss:

This section has to include a list of all the available allowances which are exempt. The taxpayer then needs to select the correct category from the drop-down list as under:

  • Expenses/ Deductions u/s 57.
  • Depreciation u/s 57.
  • Set off of Loss.
  • Others.

Most importantly, the details are to be submitted as per the table mentioned below:

A5- Income/Gain/Loss:

This section includes the self-computation of income from house property chargeable to tax A5=(A1-(A2+A3+A4)). Also, if your income computation exceeds the minimum of 2.5 lakh then you should file your ITR.

FAQs

Is it necessary to login to Compliance Portal? What happens if I don’t log in?

Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.

What is an additional query request?

Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request. This is to seek further information/clarification from the taxpayer. Hence, the taxpayer needs to respond to the additional query request as well.

How will the taxpayer come to know about pending e-verification?

If there are any e-Verification issues it will be pushed to the compliance portal for e-verification Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.