Partition of HUF

Hindu Undivided Family, commonly known as HUF is a separate entity from its members for the purpose of Income Tax. It is is treated as a ‘person’ under section 2(31)​ of the Income-tax Act, 1961 . The term is defined under the Hindu Law as a family that consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. So basically a Hindu Undivided Family is not created by any Act but by status. Partition means ending the status of Joint Hindu family. Partition of HUF can be of two types under Hindu Law i.e. total and Partial.

Meaning of Partition

Partition means division of property. Under Hindu Law the Joint Family status comes to an end when there is division of property among the members and joint ownership of property comes to an end. The division will be such as that the share of each member will be determined physically. Further, a division of income from any property, without physical division of such property does not amount to partition.

Types of Partition

Partition under Hindu Law, can be total or partial.

  • Total or Complete Partition: Assets of HUF are physically divided. Further, all the members cease to be members of the HUF. And all the properties cease to be properties belonging to the said HUF.
  • Partial Partition: Partition could be partial also with regards to the persons constituting the HUF, or the properties belonging to the HUF, or both. It may be partial vis-à-vis members, where some of the members go out on partition and other members continue to be the members of the family. Partial partition can be specific too where the property is divided between members and the rest of the property continues to be the HUFs property.
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Right to claim Partition of HUF

Under the Hindu law, the partition of a joint Hindu family may take place at the instance of the following persons:

  • A coparcener*
    • Co-parceners refers to two or more persons sharing an inheritance or joint heirs of a property. These coheirs are called “Co-parceners”.
    • HUF consists of co-parceners (who are family members) and the distant relatives, called members of HUF (e.g. brother-in-law, sister-in-law, etc.,).
    • Co-parceners are the family members and it consists of four levels of lineal descendants including the first male ancestor.
  • A son in the womb of his mother at the time of partition of the property
    • A son in his mother’s womb is treated in law in existence and is entitled to re-open the partition to receive a share equal to that of his brothers.
  • Female sharers cannot demand a partition. However, are entitled to get their share when the joint family property is actually divided on partition.
    • Mother gets equal share if there is partition among sons after death of father,
    • Wife gets a share equal to that of a son at the time of partition between father and sons.
  • Daughters have the same rights as sons to reside in and to claim for partition of the parental dwelling house.
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Procedure and Assessment after Partition of HUF

Partition of HUF takes place on the date the properties are physically divided. There must be physical division of the properties. Physical division of income without physical division of properties does not amount to Partition. The following procedure is prescribed under section 171 of Income Tax Act for partition and assessment of HUF:

  • HUF shall be considered as undivided unless where a finding of partition has been given under this section in respect of HUF.
  • Where it is claimed by the members that a partition has taken place to AO at the time of making assessment u/s 143 or 144. Then, the AO shall make an inquiry after giving notice of inquiry to all the members of the family.
  • On the completion of the inquiry, the AO shall record a finding mentioning the total or partial partition of the joint family property. And the date on which it has taken place

Responsibility to pay Tax

  • Where a finding of total or partial partition has been recorded by the AO. And the partition took place during the previous year than:
    • The total income of HUF for the period up to the date of partition shall be assessed as if no partition had taken place; and
    • Each member or group of members shall be jointly and severally liable for the tax on the income so assessed in addition to any tax for which he/she may be separately liable
  • The partition took place after the end of the previous year, the total income of the previous year of the joint family shall be calculated as if no partition had taken place. Each member of group of members shall be jointly and severally liable for the tax on the income so assessed.
  • The several liability of any member or group of members shall be according to the portion of the joint family property allotted to him/her at the partition, whether total or partial.
  • The above provisions shall, also apply in relation to the levy and collection of any penalty, interest, fine or other sum in respect of any period up to date of the partition, whether total or partial.

Notwithstanding anything contained in this section, if the AO finds after completion of the assessment of a HUF that the family has already effected a partition, whether total or partial. The AO shall proceed to recover the tax from every person who was a member of the family before the partition. Further, every such person shall be jointly and severally liable for the tax on the income so assessed.

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Partition of assets of the HUF property

As per the Hindu Law, part distribution of some of the assets of the HUF, i.e. partial partition of the HUF, either in respect of certain assets or in respect of some of the members is fully valid. However, income tax law does not recognize such partial partition of the HUFs’ assets. The income tax laws require that partition of HUF should be full. So in case of partial partition of some assets, the income in respect of such assets, shall be clubbed and included in the income of the HUF. Even if such assets are received by the member/members.

Nature of the property received on partition

The nature of the joint family property on partition shall be of joint family property when the recipient person is married. Hence the character of the property shall remain that of the joint family property. Such property shall be considered as individual property, until the recipient is unmarried or is reduced to a single person. Thus individual property shall continue to be individual property on inheritance. Further, HUF property on partition shall be that of the joint Hindu family subject to the existence of family during the relevant assessment year

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FAQ

Whether the sum received by a member as and towards his share as coparcener of HUF, on its partition is taxable as income?

The sum received by a member as and towards his share as coparcener of HUF, on its partition cannot be brought to tax as income. As partition is not considered as a transfer.

What will be the treatment of assets after partition, as per Income Tax Act?

Treatment of capital gains on distribution of assets on partition of HUF shall be as under:
– Section 47: No capital gains shall arise to HUF on distribution of assets on partition of HUF.
– Section 49(1): Cost of acquisition of such assets to the member shall be the cost of acquisition of such asset in the hands of HUF.
– Period of holding of assets of transferor shall also be considered for computing the period of holding of assets in the hands of transferee.

Can HUF receive gift from its members?

Earlier HUF could not give or receive gift to or from its members beyond a sum of INR 50,000/-without making the donor liable to tax u/s 56(2). However Finance Act, 2012 extended the definition of a relative to include gift from any member of an HUF to HUF. Thus an HUF can now receive a gift from its member exceeding INR 50,000/- without any liability to pay tax u/s 56(2) of Income Tax Act.

Section 194M : TDS on Payment to Resident

What is Section 194M?

Tax Deducted at Source (TDS) is an indirect method of collecting Income Tax. TDS is based on the principle of “Pay as you earn” which is beneficial for both Government as well as taxpayer.

Further, Tax Deducted at Source (TDS) is a concept where a person making payment of specified nature is liable to deduct tax at a prescribed rate and also deposit the same with the Government. The TDS rates applicable under different sections & subsection are between 1%- 30%.

Further, Individuals and HUFs not liable to deduct TDS u/s 194C, 194H or 194J have to deduct TDS u/s 194M.

Section 194M covers various payments such as the Payment of commission (not being insurance commission), brokerage, contractual fee, the professional fee to a resident person by an individual or a HUF who are not liable to tax audit as per Income Tax Act.

As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%
Tip
As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%

Understanding Section 194M

The Finance Minister announced the introduction of Section 194M, regarding tax deduction at source from any money which an individual or HUF pays to a resident contractor when the services are provided for personal use. Priorly, individuals and HUFs were not liable to deduct TDS for personal or business-related payments.

Hence, in such cases, the books of accounts are to be audited if the turnover of business exceeds 1 Cr. Also, the books of accounts have to be audited even if the total turnover of a profession exceeds 50 Lakhs. This means Section 194M applies to both, personal and business-related payments.

Therefore, individuals and HUFs have to deduct TDS u/s 194C and 194J if the books of accounts have to be audited. Moreover, TDS on commission or brokerage is deducted under section 194H. Furthermore, payments to non-residents are not covered under this section.

The deductors (Individuals & HUF) do not require a TAN (Tax Account Number) to deduct tax u/s 194M. They can do so by quoting their PAN to the government.

As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%
Tip
As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%

Rate of TDS u/s 194M

The TDS is deducted u/s 194M if the turnover of the business or profession exceeds the amount of INR 1 Cr or INR 50 Lakhs respectively in a financial year. The TDS will be deducted at a rate of 5%. TDS will be deducted at a rate of 20% if the deductee does not possess a PAN card.

The CBDT has notified that any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied with a challan-cum-statement in Form No. 26QD.

Hence, every person that deducts TDS u/s 194M is responsible to furnish the certificate of deduction of tax at source in Form 16D. TDS certificate has to be furnished to payee within 15 days from due date of furnishing statement in Form 26QD. The individual can download Form 16D from the TRACES portal.

FAQs

What is the time limit on depositing TDS?

The due dates for the payment of the deducted TDS are on or before the 7th of next month. It means if the deductor has deducted tax from payments in the month of July, then he has to pay the TDS on or before the 7th of August.

Who has to deduct TDS u/s 194M?

An individual or HUF, who has to make payment to a resident for a contract work completed or any professional service provided, will have to deduct tax at source u/s 194M.
As per the Union Budget 2019, any individual/HUF paying any sum to a resident, for carrying out any work (including the supply of labor) under any contract or by way of fees for professional services rendered during the financial year, exceeding INR 50,00,000 in a year will have to deduct TDS at the rate of 5%.

What is a tax audit report?

The indirect tax is implied on the income received from financial products. These financial products can be mentioned as:
> Interest received on fixed deposits,
> Incentives from the employer,
> Commission’s payments,
> Dividends on bonds,
> Sale/purchase or rent of any immovable property and money earned as lottery

Tax Savings & Deductions under Chapter VI A

Individuals and HUFs (Hindu Undivided Family) can claim income tax deductions on certain investments and expenses undertaken during the financial year.

Section 80C: Income Tax Saving Investments & Payments

Section 80C allows deduction on certain investments and expenses mentioned under the Income Tax Act. The maximum limit for this deduction is INR. 1,50,000.

Investments Eligible for Tax Deductions u/s 80C

  • ELSS – Equity Linked Saving Scheme: It is an equity-based tax saving mutual funds. Investments made up to INR 1,50,000 under ELSS qualify for tax benefits. It has a lock-in period of 3 years.
  • PPF – Public Provident Fund: PPF is a government-backed provident fund with a fixed interest rate of approximately 8% p.a. You can invest a minimum of INR. 500 and maximum INR. 1,50,000 in a financial year. The PPF deposit, interest, and withdrawal amount are exempt from tax. The maturity period for a PPF is 15 years.
  • EPF – Employee Provident Fund: is a savings scheme for employees.  Each month a portion of their salary is deducted towards EPF. This fund is made available to the employee when they retire or change jobs. Employee’s contributions to EPF was tax deductible u/s 80C. However, as per the recent announcement in Budget 2021,  Interest earned on annual PF contribution exceeding 2.5 lacs from April 2021 will now be taxable. While the employer’s contribution is completely tax-free Any withdrawal after the specified period (5 years) is exempt from income tax.
  • NSC – National Savings Certificate: is a small savings scheme offered by the Indian Post office earning an interest rate of 8.0% p.a.
  • Tax Savings Fixed Deposits: also known as term deposits are offered by different banks and financial institutions for tax saving investment u/s 80C.
  • Sukankya Samriddhi Savings Scheme: is aimed at the betterment of girl children in India. The deposits earn an interest of 8.6% p.a. with a maturity period of 21 years.
  • ULIP i.e. Unit Linked Insurance Plan: any amount invested by an individual in a pension fund set up by a mutual fund or UTI is allowed as a deduction u/s 80C up to INR. 1,50,000
  • SCSS i.e. Senior Citizen Savings Scheme: is open to any person above the age of 60 years, or 55 years who have opted for retirement. Savings under the SCSS scheme will earn interest at 8.6% p.a with a lock-in period of 5 years.
  • Pension Fund by UTI: investment amount up to INR 1,50,000 by an individual in a pension fund set up by a mutual fund or UTI is eligible for exemption

Payments eligible for Income Tax Deductions u/s 80C

  • Life Insurance Premium: amount paid as a life insurance premium for self, spouse or children is eligible for deduction. However, the amount paid should be less than 10% of the sum assured.
  • Home Loan Repayment: includes repayment of principal amount towards a home loan taken for construction or purchase of residential house property. The
    stamp duty expenses, registration expenses and transfer expenses paid are also eligible for deduction.
  • Children Tuition Fees: Tuition fees paid for a full-time course to any school, college, university or educational institute in India. The deduction is available for up to two children.

Section 80CCD – Tax Deductions for Contribution to Pension Fund

Any individual who contributes towards the National Pension Scheme (NPS) can claim deduction under this section. There are 3 different parts of the section 80CCD, that allows the deduction subject to different for a different condition.

Tax Benefits of NPS (National Pension Scheme)
Section Component Deduction
80CCD(1) Employees Contribution to Pension Fund INR 1,50,000
80CCD(2) Employers Contribution to Pension Fund

10% of Basic Salary 

80CCD(1b) Voluntary Contribution to NPS INR 50,000

Both Section 80C and 80CCD are covered under section 80CCE. The total deduction amount eligible for deduction u/s 80CCE is INR 1,50,000 in a financial year.

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Section 80D – Tax Deductions for Medical Insurance Premium

Section 80D of the income tax allows individuals and HUFs (Hindu Undivided Family) to claim a deduction for the amount paid towards medical expenditure. The medical expenditure includes:

  • Medical insurance premium
  • Medical expenditure
  • Preventive health checkup

An individual taxpayer can claim the deduction for medical expenses paid for the following:

  • Self
  • Spouse
  • Children
  • Parents

In the case of Hindu Undivided Family (HUF), a deduction is allowed for medical insurance premium paid for a member of HUF.

Section 80DD – Tax Deductions for Differently Abled Dependant

A resident Individual/ HUF can claim a deduction for any expenses incurred on the treatment of dependent family member.
The list of diseases covered u/s 80DD is:

  • Autism
  • Cerebral palsy
  • Blindness
  • Low vision
  • Leprosy cured
  • Hearing impairment
  • Locomotor disability
  • Mental retardation
  • Mental illness

The deduction limit u/s 80DD is:

Category Deduction Amount
Disabled Person (40% or more of the disability) INR 75,000
Severely Disabled Person (80% or more of the disability) INR 1,25,000

Section 80DDB – Tax Deductions for Treatment of Specified Diseases

Section 80DDB is for expenses incurred on the treatment of specified diseases. The list of diseases covered u/s 80DDB are:

  • Neurological Diseases with a disability of at least 40%
  • Malignant cancer
  • AIDS
  • Chronic Kidney failure
  • Haemophilia
  • Thalassemia

The deduction limit u/s 80DDB is:

Age Deduction Amount
Individual or a member of HUF, aged below 60 INR 40,000
Individual or a member of HUF, aged 60 years or above INR 1,00,000

Section 80U – Tax Deductions for Individuals with Disability

Deduction u/s 80U can only be claimed by Resident individuals with a disability. HUF cannot claim tax deduction u/s 80U if any of its members are suffering from a disability. An individual suffering from any of the following disabilities is eligible to claim deduction u/s 80U:

  • Autism,
  • Cerebral palsy,
  • Blindness,
  • Low vision,
  • Leprosy cured,
  • Hearing impairment,
  • Locomotor disability,
  • Mental retardation,
  • Mental illness.

The tax deduction limit u/s 80U is

Category  Deduction Amount
Disabled Person (40% or more of the disability) INR 75,000
Severely Disabled Person (80% or more of the disability) INR 1,25,000

 

Section 80E – Tax Deductions for Interest on Education Loan

Section 80E allows a deduction for interest paid on repayment of education loan taken for higher education. The deduction u/s 80E is not available for principal repayment of the education loan.
There is no monetary limit u/s 80E. An individual can claim the total interest amount paid as a deduction. However, a deduction is available only for 8 consecutive years.

Only individuals are eligible to claim deduction u/s 80E if they fulfil the following conditions:

  • The loan must be taken from the financial or charitable institution.
  • The loan repayment must be done by the taxpayer
  • The purpose of the loan taken should be to pursuing higher education for self or for a relative. Relative includes spouse, children, and student for whom an individual is a legal guardian.

Section 80EE – Tax Deductions for First Time Home Buyer

Sections 80EE allows individuals to claim the deduction for interest paid on the home loan taken for the first residential house. The eligible deduction amount for AY 2019-20 (FY 2018-19) is INR 50,000.
This limit of Rs. 50,000 is over and above the deduction of Rs. 2,00,000 allowed for home loan interest u/s 24.

To claim income tax deductions u/s 80EE following conditions must be fulfilled:

  • An individual is a first time home buyer.
  • Value of residential house should not exceed Rs. 50,00,000.
  • A loan has to be sanctioned between 1st April 2016 to 31st March 2017.
  • A loan must be sanctioned by Financial institutions or Housing Finance Company.
  • Sanctioned loan amount should not exceed Rs. 35,00,000.
  • A taxpayer should not own any other residential house on the date of a sanction of a loan.

Section 80G – Donation to Charitable Organisations

Section 80G allows Individuals, HUFs, and businesses to claim income tax deductions for donations made to certain relief funds and charitable institutions. However, only donations made to funds prescribed by the government of India qualify as a deduction.

The qualifying limit eligible for deduction differ based on the charitable organization. Types of income tax deductions on donations u/s 80G are:

  • 100% Income Tax Deduction without any qualifying limit
  • 50% Income Tax Deduction without any qualifying limit
  • 100% Income Tax Deduction subject to 10% of adjusted gross total income
  • 50% Income Tax Deduction subject to 10% of adjusted gross total income
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Section 80GG – Rent paid

Section 80GG allows a tax deduction for rent paid for furnished or unfurnished accommodation. The deduction is allowed to taxpayers who do not receive any HRA from their employer.

Following conditions must be fulfilled to claim deduction u/s 80GG for Rent paid

  • Only an individual can claim deduction u/s 80GG. The individual can be either salaried or self-employed.
  • In the case of a salaried person, they should not be receiving House Rent Allowance from an employer.
  • For claiming a deduction, Form-10BA needs to be submitted with the Income Tax Department.
  • Assessee or spouse or minor child or HUF of which they are a member should not own be owning any residential accommodation at the place where he/she is residing/performing office duties under-employment/carrying business or profession
  • The assessee should not own a house property at any place, for which income is calculated as income from self-occupied house property.

The eligible deduction limit u/s 80GG is lower of the following amounts:

  • Total rent paid less 10% of total income
  • 25% of the annual salary
  • INR 5000 per month i.e INR 60,000 annually

Section 80TTA – Savings Interest

Section 80TTA of the Income Tax Act allows a deduction on savings account interest. Individuals (other than senior citizens) and HUFs can claim a deduction up to INR 10,000 for a financial year. The bank account statements are required to calculate and claim deduction u/s 80TTA.

Following interests are eligible for deduction u/s 80TTA:

  • Interest earned from Saving Account with Bank,
  • Any interest earned from Saving Account with Co-operative Society,
  • Interest earned from Saving Account with Post Office.

Section 80TTB – Interest Deduction on deposits for Senior Citizens

Section 80TTB under the Income Tax Act which allows resident senior citizens to claim a deduction on interest income up to INR 50,000 for a financial year. This section is applicable from FY 2018-19 (AY 2019-20) onwards.

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Following interests are eligible for income tax deductions u/s 80TTB:

  • Interest earned on Bank Deposits i.e, saving account interest, fixed deposits, recurring deposits.
  • Any interest earned on deposits with Co-operative Society engaged in banking.
  • Interest earned from Post Office Deposits i.e, Saving Account Interest, NSC, Senior Citizens Savings Scheme Accounts, Time Deposits, 5-year recurring deposits, and monthly income schemes.

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FAQs

Can I save more than INR 1.5 Lakh in Taxes?

Yes, apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE. You can save upwards of INR 2,00,000 in taxes.

Can I claim Chapter VIA deductions under the New Tax Regime?

With the majority of income tax deductions slashed in the New Tax Regime, some Deductions are still claimable.
– Rebate u/s 87A
– Standard Deduction on Rent Received
– Agricultural Income
– Life Insurance Income to Beneficiary
– Retrenchment Compensation
– Voluntary Retirement Scheme
– Leave Entrenchment on Retirement

What is the Section 80CCD(2) of Income Tax?

Section 80CCD(2) allows employees to claim up to 10% of basic plus DA for Tax Deductions. This contribution is considered an additional deduction as its not part of Rs 1.5 lakh allowed under Section 80C.

Clubbing of Income under section 64

​​Normally, a person is taxed in respect of income earned by him only. However, in certain special cases the income of other person is included (i.e. clubbed) in the taxable income of the taxpayer. In such a case he will be liable to pay tax in respect of his income (if any) as well as the income of other people too. The situation in which the income of another person is included in the income of the taxpayer is called clubbing of income.

What is Clubbing of Income under section 64 of the Income Tax Act?

Clubbing of income means income of other person included in assessee’s total income. This is allowed under Section 64 of the IT Act. This means that a person cannot divert his income to any other person. For example: If the income of your spouse is included in your total income and also taxed in your hand, then this is known as clubbing of income.

However, there would not be any clubbing of the income, earned from the investment of clubbed income. For example, Hari transfers INR 10,000 to his wife Priya and Priya invests the money in an FD scheme. Now the interest earned on this FD would get clubbed in the total income of Hari and he would be liable to pay tax on the same. However, if Priya re-invests the interest earned (i.e. clubbed income) in some FD or any other investment scheme then the income from such re-investment would be taxable in the hands of Priya only. This interest income from reinvestment will not be clubbed with Hari’s income.

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Specified persons to club income

We cannot club income of any person on random basis while computing total income of an individual and also not all income of specified person can be clubbed. As per Section 64 of Income Tax Act, there are only certain specified income of specified persons which can be clubbed while computing total income of an individual.

When does Clubbing apply?

In case of following situations, clubbing provisions will apply:

Section Specified person Specified scenario Income to be clubbed
Section 60 Any person
Transfer of Income without transfer of Assets either by way of an agreement or any other way,

– Any income from such asset will be clubbed in the hands of the transferor.

– Irrespective of whether such transfer is revocable or not.

Section 61 Any person Transferring asset on the condition that it can be revoked Any income from such asset will be clubbed in the hands of the transferor
Section 64(1A) Minor child Any income arising or accruing to your minor child [Child includes step child, adopted child and minor married daughter] – Income will be clubbed in the hands of higher earning parent.
Note:
If marriage of child’s parents does not subsist, income shall be clubbed in the income of that parent who maintains the minor child in the previous year

– If minor child’s income is clubbed in the hands of parent, then exemption of INR 1,500 is allowed to the parent.

– Exceptions to clubbing
Income of a disabled child (disability of the nature specified in section 80U)

– Income earned by manual work done by the child or by activity involving application of his skill and talent or specialized knowledge and experience

– Income earned by a major child. This would also include income earned from investments made out of money gifted to the adult child. Also, money gifted to an adult child is exempt from gift tax under gifts to ‘relative’.
Section 64(1)(ii) Spouse If your spouse receives any remuneration irrespective of its nomenclatures such as Salary, commission, fees, or any other form and by any mode i.e., cash or in-kind from any concern in which you have a substantial interest

–  Income shall be clubbed in the hands of the taxpayer or spouse, whose income is greater (before clubbing).

The exception to clubbing: – Clubbing is not attracted if the spouse possesses technical or professional qualifications in relation to any income arising to the spouse and such income is solely attributable to the application of his/her technical or professional knowledge and experience

Section 64(1)(iv) Spouse Income from assets transferred directly or indirectly to the spouse without adequate consideration. – Income from out of such asset is clubbed in the hands of the transferor. Provided the asset is other than the house property.

– Exceptions to clubbing No clubbing of income in the following cases:

a. Where the asset is received as part of the divorce settlement

b. If assets are transferred before marriage

c. No husband and wife relationship subsists on the date of accrual of income

Section 64(1)(vi) Daughter-in-law Income from the assets transferred to son’s wife for inadequate consideration Any income from such assets transferred is clubbed in the hands of the transferor
Section 64(1)(vii) Any person or association of person
Transferring any assets directly or directly for inadequate consideration to any person or AOP to benefit your daughter-in-law either immediately or on a deferred basis
Income from such assets will be considered as your income and clubbed in your hands
Section 64(1)(viii) Any person or association of person Transferring any assets directly or directly for inadequate consideration to any person or association of persons to benefit your spouse either immediately or on a deferred basis Income from such assets will be considered as your income and clubbed in your hands
Section 64(2) Hindu Undivided Family In case, a member of HUF transfers his individual property to HUF for inadequate consideration or converts such property into HUF property Income from such converted property shall be clubbed in the hands of individual

Transfer of income without transfer of an asset to any person

Clubbing applies when you (transferor) transfer your income to some other person without transferring the ownership of the asset from which the income is derived. Therefore the income so transferred will still be included in your total income and also taxable in your hands.

For Example: Pranav transferred the income from his rental property, to his wife Divya. The property is in the name of Pranav only and ownership of the property is not transferred to Divya. In this situation, rental income will be taxed in the hands of Pranav only.

Transfer of asset (revocable transfer) to any person

  • In case of a revocable transfer* of asset the clubbing will apply and hence the income from such asset will be taxable in the hands of transferor even though asset has been transferred.
  • Clubbing not applicable if transfer by way of trust which is irrevocable during the lifetime of beneficiaries/ transferee

*Revocable transfer of asset means where a transferor retains the right or power to re-acquire the whole or any part of the asset or the income from such asset at any time in future during the lifetime of the transferee.

For Example: If in the earlier example, Pranav transfers the rental income as well as the property to Divya, with a condition that he can re-acquire the property whenever he wishes. In this situation, rental income from the property will be taxed in the hands of Pranav only.

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Clubbing of Spouse Income

Income earned by your Spouse from the firm/company in which you have substantial interest

  • Your spouse income from such a firm/company will get clubbed with the income of the person (you or your spouse) having a higher total income. While comparing the total incomes, income from such a firm/company should be ignored.
  • A person is said to have substantial interest if he/she individually or along with his/her relative holds 20% or above shares of the company or exercise the voting power of 20% or above. In the case of a firm if a person is entitled to have a share of 20% or above in profits.
  • However the above clubbing provision shall not apply if the income earned by your spouse is due to practical application of professional/technical skill he/she possesses.
  • Income other than salary, commission, fees or remuneration is not clubbed under this clause

Eg: Pranav holds 51% of the shares in a private limited company. His wife Divya is getting a salary of Rs. 20,000 per month from the same company. She is not an active employee and does not contribute towards the company’s operations. Pranav’s total annual income is Rs. 10,00,000 whereas Divya’s total income (Excluding salary from the company) is Rs. 5,00,000. In this situation, Divya’s annual salary of Rs. 2,40,000 will be clubbed with Pranav’s income and it will be taxable in the hands of Pranav.

Income from the asset transferred to the Spouse against inadequate consideration

  • The above income will get clubbed in your total income and you would be liable to pay tax on that income.
  • However, the clubbing shall not apply if the above transfer is in a connection with an agreement to live apart or divorce.
  • Let us understand the above provision with the help of the below examples:
    • First Scenario: Rohan transferred an asset worth Rs.1,50,000 to his wife for a consideration of INR 50,000. Here ⅔ rd (two-thirds) of the income from the asset would get clubbed in Rohan’s income and he would be liable to pay tax on this income. However, balance ⅓ rd will be taxable in the hands of his wife as she has paid INR 50,000 being 1/3rd (one-third) of the value of the property.
    • Second scenario: Mr. Aksh gifted INR 5,00,000 to his wife. She invested this amount in the fixed deposit and received interest of 4,500 INR p.a. (Gift received from husband is exempt in the hands of his wife.) Since cash (asset) received was converted into another asset (FD) by Mrs. Aksh, the interest earned of INR 4,500 would be clubbed in the income of Mr. Aksh as per Section 64(1)(iv) of the Income Tax Act.

Note: As per the judgement in R Dalmia Vs CIT (1982) and few other judgments, pin money (i.e. an allowance given to the wife by her husband for her personal and usual household expenses) is not taxable. Further, if the asset is acquired by the spouse out of pin money then the income from such assets cannot be clubbed with the income of her husband.

When an asset is transferred to any person or association of person for the immediate or deferred benefit of Your Spouse

In such a situation, any income out of such an asset would get clubbed in your total income and you would be liable to pay tax on the same.

Clubbing of Income of Son’s Wife

When asset is transferred to Son’s wife

Income earned by your Son’s wife from the asset transferred to her against inadequate consideration would get clubbed in your total income and you would be liable to pay tax on it. Cross transfers are also covered.

When an asset is transferred to any person or association of person for the immediate or deferred benefit of Son’s wife

Here the Income earned from the asset transferred against inadequate consideration would get clubbed in your total income and you would be liable to pay tax on it.

Note: Clubbing would be applicable only when your relationship with spouse and Son’s Wife exist both at the time of transfer of asset and at the time when income is earned.

Clubbing of Income of a Minor child

Any income earned by a minor child (including married minor daughter) will get clubbed with income of the parent whose total income is higher (before inclusion of income of minor child).

In case of a minor child, whose parents are living apart because their marriage relationship does not exist, any income earned by such minor child would get clubbed in the total income of the parent who is maintaining the child.

The income of a minor child would not be clubbed in following circumstances:

  • The minor child has earned income through his/her manual work
  • The minor child has applied his/her skill, talent, specialized knowledge and experience for earning the income.
  • If the minor child is suffering from any disability (disability defined as per section 80U)
  • In case of transfer of House property to married minor daughter, the clubbing will not apply here. Hence any income generated by House property would not be taxable in the hands of Parents.

Clubbing of Income of a Major child

There will not be any clubbing of the income earned by major child (18 years and above) with the total income of the Parents. Whether the major child is earning using his own specialization/skill or on investment of money or asset transferred to him by his Parents.

For example: Rohan who is 18 years old gets Rs. 50,000 as gift from his Father/Mother. He invest the money in a FD scheme. Now the interest income on FD would be taxable in the hands of Rohan only. It would not get clubbed with the total income of the Parents.

Clubbing of Income from H.U.F Property

If you are a member of a HUF and you transfer your property to the common pool of such HUF for inadequate consideration then the income from such property will get clubbed with your total income and you would be liable to pay tax on it.

However, when this transferred asset gets distributed among family members as a result of the complete or partial partition of HUF, the income from the asset received by your spouse would get clubbed in your total income and you would be liable to pay tax on it.

FAQs

How to show clubbed income in ITR?

Except for ITR-1 & ITR-4S, every other ITR contains a section where you can add the income of other persons included in your income. The details which you have to provide are:
– Name of person
– PAN of a person (Optional)
– Relationship
– Nature of Income
– Amount
You also need to make sure that whatever income you enter over here has already been added to the incomes in their respective heads while filing ITR on Income Tax Portal.

Can losses be clubbed?

Clubbing provisions will be equally applicable for losses because: For example, if a person has incurred some loss, in such a situation, such a loss is not allowed to be transferred to anyone and it will be clubbed in his/her own income.

Do any clubbing provisions exist in case of a revocable transfer?

​​Revocable transfer is generally a transfer in which the transferor directly or indirectly exercises control/right over the asset transferred or over the income from the asset.
As per section 61​, if a transfer is held to be a revocable, then income from the asset covered under revocable transfer is taxed in the hands of the transferor. The provisions of section 61 will not apply in case of a transfer by way of trust which is not revocable during the life time of the beneficiary or a transfer which is not revocable during the lifetime of the transferee.

Section 80TTA: Deduction for Interest Earned on Savings Account

What is Deduction under section 80TTA?

Every quarter bank credits interest to your savings account. This savings interest is considered as your taxable income under the head “Income From Other Source.” Section 80TTA of the Income Tax Act was introduced in order to allow a deduction of up to INR 10,000 on such interest.

Deduction under section 80EEA is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80EEA is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who can Claim Savings Interest Deduction Under Section 80TTA?

80TTA deduction was introduced to encourage taxpayers to generate more savings. It is available to individuals and HUFs other than senior citizens. Section 80TTB is applicable in the case of a senior citizen.

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What is the Deduction Limit Under Section 80TTA?

The maximum deduction allowed under section 80TTA of Income Tax Act is INR 10,000 for FY 2018-19 (AY 2019-20). If interest income from all the saving accounts is less then INR 10,000 then the entire amount is deductible. If total interest from saving accounts exceeds INR 10,000 then the maximum of INR 10,000 will be deductible and the remaining amount will be taxable.

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Which Interests are Eligible for Deduction Under Section 80TTA?

Following interests are eligible for a savings interest deduction under this section:

  • Interest earned from Saving Account with Bank,
  • Any interest earned from Saving Account with Co-operative Society,
  • Interest earned from Saving Account with Post Office.

Following interests are not eligible for deduction under this section:

  • Interest earned from fixed deposits,
  • Any interest earned from recurring deposits,
  • Interest earned from any other time deposits.

How to Claim Savings Interest Deduction Under Section 80TTA?

You can claim a deduction by filing your ITR. First, you need to add total saving interest as income under the head “Income From Other Source”, and then enter the same amount as a deduction under Chapter VI-A.

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How is the Deduction Calculated Under Section 80TTA?

In-order to understand the calculations better, let us take an example;

Ms Desai is a resident individual. And has earned the following income during the FY 2019-20:

  • Interest earned from Union Bank Savings Account: INR 16,000
  • Interest earned from Post Office FD: INR 24,000
  • Interest earned on Debentures: INR 3,500

Ms Desai will be able to claim deduction under section 80TTA only on the interest earned from Union Bank Savings Account and the eligible deduction that is available u/s 80TTA that she can claim is INR 10,000.

Comparison between Section 80TTB and 80TTA

Parameters Section 80TTB Section 80TTA
Eligibility Only senior citizens Individuals and HUFs can also claim deductions
Exemption Limit Maximum INR 50,000 a year Maximum INR 10,000 a year
Specified Income Deduction on interest from all kind of deposits Deduction on interest from the savings account only
Applicability for NRI’s NRI’s are not eligible to claim deductions under 80TTB NRI and NRO’s who have a savings account can claim deduction u/s 80TTA

ITR Form Applicable for Section 80TTA

The taxpayer can claim deductions under this section while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

Supporting Documents

In the case of Section 80TTA, along with the common documents such as Form 16, you only need to show present your bank statements showing your transactions of savings account for calculating the interest earned and the deductions.

FAQs

Is TDS applicable on saving bank account interest?

No. TDS is not applicable on saving bank account interest. However, if it is NRO account then TDS is applicable.

Can an NRI claim a deduction u/s 80TTA?

Yes, an NRI can claim a deduction on saving bank account interest under section 80TTA.

What documents are required to claim deduction u/s 80TTA?

The bank account statement is required to calculate and claim deduction under section 80TTA.

For how many bank accounts can I claim a deduction u/s 80TTA?

There is no limit on the number of accounts or the interest that is earned via these accounts. One has to note that the maximum deduction that is available u/s 80TTA is INR 10,000 irrespective of the number of accounts.

Can a senior citizen claim deduction u/s 80TTA?

No, a senior citizen can claim deduction under section 80TTB and not section 80TTA

Is the deduction that is available under section 80TTA over and above the deduction available under section 80C?

Yes, the deduction of INR 10,000 under section 80TTA is available over and above the deduction of INR 1,50,000 availabe under section 80C.

Section 80G : Deduction for Donation to Charitable Organizations

What is Deduction under section 80G?

Section 80G of the Income Tax Act allows a deduction for any contribution made to certain relief funds and charitable institutions. This deduction can be claimed by individuals, HUFs, and businesses. However, not all donations are eligible for deductions under section 80G. Only donations made to prescribed funds by the government of India qualify as a deduction.

Deduction under section 80G is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80G is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

How to Claim Deduction Under Section 80G?

Section 80G is available to all types of taxpayers. Even the mode of payment is an important thing while considering deductions. The deductions can only be claimed when the mode of payment is Cheque or Draft or Cash. However, donations made in cash that are exceeding INR 2000 will not be deductible. Similarly, other materials such as food, clothes, or medicines are not eligible for deductions under Section 80G.

In order to claim the deduction under Section 80G for a contribution, one needs to submit the following details:

  • Name of Donee
  • PAN of Donee
  • Address of Donee
  • Amount Donated

Eligibility for Deduction Under Section 80G

Tax Deduction on Donation

List of Funds Eligible for Deduction Under Section 80G

Donations with 100% Income Tax Deduction without any qualifying limit:

  • National Defense Fund set up by the Central Government
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • An approved university/educational institution of National Eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund set up by a State Government for the medical relief to the poor
  • National Illness Assistance Fund
  • National Blood Transfusion Council or to any State Blood Transfusion Council
  • Fund for Technology Development and Application
  • National Sports Fund
  • National Cultural Fund
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  • National Children’s Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
  • The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
  • Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions — India) Fund
  • Swachh Bharat Kosh (applicable from the financial year 2014-15)
  • Clean Ganga Fund (applicable from the financial year 2014-15)
  • National Fund for Control of Drug Abuse (applicable from the financial year 2015-16)

Donations with 50% Income Tax Deduction without any qualifying limit:

  • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • The Rajiv Gandhi Foundation

Donations with 100% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income:

  • Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
  • Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India
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Donations with 50% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income

  • Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
  • Government or any local authority to be utilized for any charitable purpose other than the purpose of promoting family planning
  • Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
  • Any corporation referred in Section 10(26BB) for promoting the interest of minority community
  • For repairs or renovation of any notified temple, Mosque, Gurudwara, Church, or another place
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What is Adjusted Gross Total Income under 80G?

The taxpayer needs to calculate Adjusted Gross Total Income for donation made to charity/Trust which is subject to the qualifying limit. For calculating “Adjusted Gross Total Income” one needs to first calculate the gross total income earned from all the sources, and subtract the following from it:

  • All the Chapter VI-A Deductions except 80G,
  • Exempt Income,
  • Short Term Capital Gains taxed @15% u/s 111A,
  • All Long Term Capital Gains,
  • Income referred to in Sections 115A, 115AB, 115AC, 115AD relating to non-residents and foreign companies.

ITR Form Applicable for Section 80G

The taxpayer can claim deductions u/s 80G while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80G in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

Supporting Documents

Apart from the usual documents such as PAN and Form 16, we need to file the Income Tax Returns, you will require the following documents:

  • Stamped Receipt: A stamped receipt for the donations made. Whenever a donation is made towards a fund or a trust, they must give a receipt. Keep it safe, and submit it while filing tax to get an exemption for the amount. The receipts should contain the stamp of the organization, name, date, and PAN
  • Form 58: For donations made towards funds with 100% exemptions, a Form 58 from the organization is also necessary

FAQs

Can I claim deduction for a donation made in cash for Rs. 25,000

As per the Income Tax Act, any contribution made by cash in excess of Rs. 10,000 will not be allowed as deduction u/s 80G. So you can claim a maximum deduction of Rs. 10,000 for cash donations.

What is the limit for deductions allowed u/s 80G?

There is no upper limit set under section 80G for claiming a deduction for donations made to charitable organizations. As long as you have taxable income to claim a deduction from, there is no limit on the amount of deduction to be claimed u/s 80G.

Can I claim a deduction for a donation made through cheque worth Rs. 50,000?

Yes, you can. There are no limits for contributions made through cheques.

Section 80DDB: Deduction for Treatment of Specified Diseases

Under Section 80DDB, a deduction is applicable if incurred expenses are on the treatment of specified diseases. Following are the specified diseases:

  • Neurological Diseases with a disability of at least 40%
  • Malignant cancer
  • AIDS
  • Dementia
  • Chronic Kidney failure
  • Haemophilia
  • Thalassemia
Deduction under section 80DDB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80DDB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who can Claim Deduction Under Section 80DDB?

The Section 80DDB deductions can be availed by:

  • Any resident individual/ HUF
  • An individual for himself or for people dependant on him, like spouse, children, parents, siblings
  • HUF for any of its members
  • The Karta of the members of the HUF

What is the Deduction Limit Under Section 80DDB?

The deduction is allowed only up to the amount of expenditure incurred. For FY 2018-19 (AY 2019-20), the following deduction limits are applicable:

AgeDeduction Amount
Individual or a member of HUF, aged below 60INR 40,000
Individual or a member of HUF, aged 60 years or aboveINR 1,00,000

From 1st April 2016, no deduction shall be allowed unless the prescription is obtained for the treatment from a specialist. It is not necessary that the specialist has to be working at a government hospital.

It is important to note that the while claiming deduction under section 80DDB the amount has to adjusted with the reimbursement received by the insurance company or employer.

How is the Deduction Calculated Under Section 80DDB?

To understand the calcualtion in a better mannner, let us take an example:

Scenario 1:

Abhijeet is 35 years old and incurs an expense of INR 70,000 on the medical treatment of a specific disease. He is eligible to claim a deduction of INR 40,000 under section 80DDB. Abhijeet also receives INR 25,000 as a reimbursement from the Insurance Company against the expenses he has incurred.

As, Abhijeet has already been reimbursed for INR 25,000, he will be able to claim a deduction of INR 15,000 (40,000 – the amount received by the insurance company i.e. INR 25,000) under section 80DDB.

Scenario 2:

Ashutosh is 40 years old and incurs an expense of INR 70,000 on the medical treatment of a specific disease. His insurance company reimbursed INR 50,000 against the expenses he made.

In this scenario, Ashutosh will not be able to claim deduction under section 80DDB as the reimbursement by the insurance company is already more than the permissible limit u/s 80DDB. (It is, however, important to note that if Ashustosh was to incur this expense for a senior citizen then, he will be permissible deduction under section 80DDB for Senior citizen will be upto Rs. 1,00,000)

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Earlier a certificate was required to be obtained and submitted in Form No. 10-1 to claim this deduction, it has been duly omitted. So, you can obtain the same but it is not a requirement to submit the form along with income tax return to claim the deduction.

Acquire Certificate for Claiming Deduction Under Section 80DDB

Here is the list of people from whom you need to acquire the certificate:

Disease Eligible person to ask for a certificate
Neurological Diseases where the disability level is proved to be of 40% and above A neurologist who has an MD degree in Neurology. Or any equivalent degree that’s recognised by Medical Council of India.
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinsons Disease
Malignant Cancers An oncologist who has an MD degree in Oncology. Or any equivalent degree that’s recognised by Medical Council of India.
AIDS (Full Blown Acquired Immuno-Deficiency Syndrome) Any specialist who has a postgraduate degree in general or internal medicine. Any equivalent degree that’s recognised by Medical Council of India. 
Chronic Renal Failure A nephrologist who has an MD degree in Nephrology. Or a urologist who has a Master Chirurgiae (M.Ch.) degree in Urology. Or any equivalent degree that’s recognised by Medical Council of India. 
Haematological Disorders A specialist who has an MD degree in Hematology. Or any equivalent degree that’s recognised by Medical Council of India. 
(i) Haemophilia
(ii) Thalassaemia

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What Should the Certificate Contain?

The acquired certificate must have the following details:

  1. Name and Age of Patient
  2. Name of the Disease
  3. Details of the specialist issuing the prescription, i.e. Name, Address, Registration Number, Qualification
  4. The name and address of the hospital if the treatment was taken in a government hospital
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ITR Form Applicable for Section 80DDB

The taxpayer can claim deductions u/s 80DDB while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80DDB in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.
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For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.

Supporting Documents

It is mandatory for the assessee to provide proof of expenditure such as medical bills along with the common documents to file ITR such as Form 16, PAN, etc. Therefore, it is compulsory to obtain a prescription for such treatments from a qualified doctor.

FAQs

What diseases does 80DDB cover?

Specified diseases such as AIDs, cancer, dementia, neurological diseases etc. are covered under 80DDB.

Can I claim Deductions on both 80d and 80DDB?

No, you cannot claim Deductions on both Section 80D and Section 80DDB. Note that Section 80D allows claiming Deductions on general Medical Expenses whereas Section 80DDB allows Deductions for treatment of specific diseases only. It is also important to note that the amount of deduction claimed will be reduced by the amount received from an insurer or reimbursed by the employer for the medical treatment of the said person.

Can I determine the amount to be Deducted u/s 80DDB?

The Deduction amount will depend on the severity of disability/disease. For Senior Citizens, the deducted amount is INR 1,00,000. Individuals below 60 years are entitled a deduction of INR 40,000.

Are all types of cancers covered under section 80DDB?

No, section 80DDB only covers Malignant Cancer.

Section 80DD: Deduction for Differently Abled Dependant

A resident Individual/ HUF can claim an income tax deduction u/s 80DD for any expenses incurred on the treatment of dependent family members. A family member includes children, spouse, parents, siblings.

Deduction under section 80DD is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80DD is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who is Eligible to Claim Deduction Under Section 80DD?

Deduction under section 80DD can be claimed by an individual/ HUF. Provided a taxpayer has incurred expenditure on a dependant family member. And a member is suffering from any of the following disabilities:

  • Autism
  • Cerebral palsy
  • Blindness
  • Low vision
  • Leprosy cured
  • Hearing impairment
  • Locomotor disability
  • Mental retardation
  • Mental illness

What are the Conditions to Claim Section 80DD Deduction?

  • This deduction can be claimed in two conditions:
    • When the person has incurred any expenses for medical treatment, nursing, rehabilitation, or training of the differently-abled dependant
    • When the person has paid or deposited any amount under a scheme framed by LIC or any other insurer on behalf of a dependant
  • A copy of the certificate issued by medical authorities certifying the ‘person with a disability’ has to be submitted along with income tax return
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What is the deduction limit?

Below deduction limits are applicable irrespective of the amount of expenditure incurred during the year. There are two categories for a person with a disability under section 80DD:

  • Disabled Person: An individual suffering from at least 40% of disability
  • Severely Disabled Person: An individual suffering from at least 80% of disability

Category

Deduction Amount
Disabled Person(40% or more of the disability) Rs. 75,000
Severely Disabled Person(80% or more of the disability) Rs. 1,25,000

ITR for Salaried Individuals
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ITR Form Applicable for Section 80DD

The taxpayer can claim deductions u/s 80DD while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80DD in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 30th November 2020 for all taxpayer.
Tip
For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 30th November 2020 for all taxpayer.

Supporting Documents

Taxpayers will need the following documents along with the common documents required to file ITR such as Form 16, PAN, etc.

  • Medical Certificate
  • Form 10-IA
  • Self-Declaration Certificate
  • Receipts of Insurance Premium

FAQs

What is the format of the certificate to claim the deduction u/s 80DD?

Income Tax Rule 11A prescribed the certificate format for deduction u/s 80DD. You can download it from the Income Tax Department.

Is the deduction amount u/s 80DD fixed or vary with expenses incurred?

The deduction amount is fixed at INR 75,000 for a disabled dependent and @ Rs. 1,25,000 for a severely disabled dependant. This amount is fixed irrespective of the amount you spend on the treatment of disabled dependants.

Can an NRI claim deduction u/s 80DD?

No. An NRI can not claim the deduction, this deduction is only available to resident taxpayers.

ITR 2A form for Multiple House Property Income [Discontinued]

ITR 2A was introduced in FY 2014-15 (AY 2015-16). This form was for Individuals and HUFs who had Salary Income and owned more than one House Property. The ones with Capital Gains could not use this form. This form has been discontinued from FY 2016-17 (AY 2017-18) onwards. From FY 2016-17 onwards you can file ITR-2 instead of ITR-2A.

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Who can file ITR 2A?

This return can be used by an individual/HUF whose total income includes…

  • Salary Income
  • Income from House property (Single or multiple house properties)
  • Income from Other sources
  • Agricultural/exempt income (no limits)

Who can not file ITR 2A?

This return cannot be used in case of following incomes…

  • Income from Capital Gains
  • Business or Profession Income
  • Income from Foreign sources and/or having any foreign asset
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Structure of ITR 2A

Part/ Schedule Heading Fields
PART A- GENERAL Personal Information Name, Address, Date of Birth, PAN, contact details.
Filing Status Employer Category, Tax status, Residential status, Return filed under the section.
PART B-TI Computation of total income Total of all the incomes. 
PART B-TTI Computation of tax liability on total income The Bank Account details, Verification details. 
Schedule IT Details of Advance Tax and Self Assessment Tax Payments BSR code, Date of Deposit, Chalan number, Tax Paid. 
Schedule TDS TDS1: Details of Tax Deducted at Source from SALARY TAN of Employer, Employer Name, Tax Deducted, etc.
Schedule TDS TDS2: Details of Tax Deducted at sources from Income other than Salary (As per FORM 16A) TAN, Name of Deductor, Year of Deduction, Tax deducted, etc.
Schedule S Details of Income from Salary Employer Details, Salary, Perquisites, Allowance, etc.
Schedule HP Details of Income from House Property Details of House Property, Name and PAN of the Co-owners and Tenants, Details of Rent Income, Interest payable on Borrowed Capital, etc.
Schedule OS Income from Other Sources A dividend, Interest, Rental income from machinery, Winnings from lotteries, Crossword puzzles, Races, Games, etc.
Schedule CYLA Details of income after set­off of current year losses  
Schedule BFLA Details of income after Set off of Brought Forward Losses of earlier years  
Schedule CFL Details of Losses to be carried forward to the future years  
Schedule VI-A Deductions under Chapter VI-A Deductions under section 80C, 80CCC, 80CCG, 80D, 80DDB, 80E, 80G, 80TTA etc.
80G Details of donations Name of Donee, Address, City or District, State Code, PAN of Donee, Amount, etc.
Schedule SPI Income of specified persons (spouse, minor child etc.) included in the income of the assessee (income of the minor child, in excess of Rs. 1500 per child, to be included) Name and PAN of Person, Relationship, Nature of Income, Amount.
Schedule SI Income chargeable to income tax at special rates Description of Special Rate Income, Special Rate, Income, Taxable Income after adjusting min. chargeable to tax, Tax thereon.
Schedule EI Details of Exempt Income (Income not to be included in Total Income) Interest income, Dividend, Agricultural Income, etc.
Schedule 5A Information regarding the appointment of income between spouses governed by Portuguese Civil Code Name and PAN of spouse, income received under different heads, amount appointed in the hands of the spouse, TDS details, etc.

List of Documents Needed to file ITR 2A

Acquire the given list of documents on the basis of relevant Incomes in order to indulge in smooth filing process.

Essential documents:

  • PAN (Permanent Account Number)
  • Bank account details
  • TDS certificates
  • Counterfoils of taxes paid
  • Details of original return if filing revised return
  • Details of notice if filing in response to notice

Documents on the basis of your type of Income:

  • Salary income
    • Form-16 Salary slips received from your employer and
    • Pension statement/passbook.
  • House/Property Income
    • Address of the property,
    • Co­owner details in case the property is co­owned,
    • In case of house/property loan ­ Interest certificates/repayment certificate from a bank,
    • In case of let out property – Rent agreement
  • Other sources
    • Savings/current account statements/Passbook
    • Interest certificates for deposits/bonds/NSC
    • PPF account statement/Passbook
    • Dividend warrants/counterfoils
    • Rent agreement in case of let out machinery
    • Details about receipts of any other incomes
  • If you’re eligible for any Chapter VI-A Tax Breaks, you may need to acquire the relevant documents from the list:
    • PPF account statement/Passbook
    • Fixed deposit certificates/statements
    • Mutual fund NAV statements
    • ELSS/ULIP/NSC investment details
    • Life insurance premium receipts
    • Medical insurance premium receipts
    • House/property loan interest certificate/repayment statement
    • Donation receipts

How to file the ITR 2A?

You can either file your ITR-2A physically or electronically. From FY 2013-14, the electronic filing of ITR-2A has been made compulsory for taxpayers having an income of more than Rs. 5 Lakhs. Apart from that, if you have foreign assets and income, or you’re seeking a refund or DTAA relief, you need to file your ITR-2A.

In case of Physical submission:

  • You can submit the ITR-2A in paper form or
  • You can submit the bar-coded return form duly filled.

The department will provide you with an acknowledgement along with stamp of submission on your copy.

In case of Online / Electronic submission:

  • You can submit the ITR-2A online after digitally signing the same or
  • You can submit the ITR-2A online and subsequently send the signed verification of the filed return in ITR-V to Central Processing Center Bangalore within 120 days of filing.
  • Or, with the newly introduced EVC, you can avoid sending the ITR-V and get done with the entire process within three to five weeks.

Sample ITR-2A Form

FAQs

Can NRI file ITR-2A?

Yes, NRIs can file ITR-2A. However, residents having income from Foreign sources and/or foreign assets can not file ITR-2A. They will have to file ITR-2

Can I file exempt capital gains from securities in ITR-2A?

Yes. If you have income from long term capital gains covered u/s 10(38) then you can show it under Exempt incomes in ITR-2A

Can I file ITR-2A for FY 2015-16?

Yes. You can file ITR-2A for income earned during FY 2015-16. This form was introduced in FY 2014-15 and was also applicable in FY 2015-16.

AY 2021-22 File ITR 2 Form for Income from Capital Gains

What is ITR 2 Form?

ITR 2 Form is the Income Tax Return form for all those individuals and HUFs who do not have any sort of Business or Professional Income. This means any individual having Salary, House Property, Capital Gains and Other Sources can file ITR 2.

Other important income tax documents include Form 16, Form 26ASForm 12BBForm 10BA and Form 15G/ 15H.

ITR 2 Form for Capital Gains Income
Download the ITR 2 Form for Capital Gains Income for AY 2021-22
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ITR 2 Form for Capital Gains Income
Download the ITR 2 Form for Capital Gains Income for AY 2021-22
Download

Up to FY 2018-19 (AY 2019-20), it was not mandatory to file Income Tax Return if the total income was less than the basic exemption limit. However, Budget 2019 inserted the seventh proviso to Section 139(1). As per this new provision, if a taxpayer has entered into high-value transactions, it is mandatory to file the ITR even if the total income does not exceed the basic exemption limit. The high-value transactions can be either of the following:

  1. If the taxpayer has deposited more than INR 1 Cr in a current account
  2. If the taxpayer has incurred foreign travel expense of more than INR 2 lacs
  3. Or, if the taxpayer has incurred electricity expense of more than INR 1 lac
File Your ITR for
Capital Gains

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ITR 2 Form Breakdown

The ITR 2 Form has 25 sections that are needed to be filled before reviewing and submitting the return after paying the tax and finally verifying the return. These sections are as follows:

  • Part A General 
  • Schedule Salary
  • Schedule House Property
  • Schedule Capital Gains 
  • Schedule 112A and Schedule-115AD(1)(iii) proviso
  • Schedule Other Sources
  • Schedule CYLA
  • Schedule BFLA
  • Schedule CFL
  • Schedule VI-A
  • Schedule 80G and Schedule 80GGA
  • Schedule AMT
  • Schedule AMTC
  • Schedule SPI
  • Schedule SI
  • Schedule EI
  • Schedule PTI
  • Schedule FSI
  • Schedule TR
  • Schedule FA
  • Schedule 5A
  • Schedule AL
  • Part B – Total Income (TI)
  • Tax Paid
  • Part B-TTI

Who can file ITR-2?

It can be filed by an individual or a Hindu Undivided Family (HUF) whose total income includes:

Further, it can be used where the income of another person is clubbed with a taxpayer’s income provided such income falls in any of the above categories.

Who can not file ITR-2?

  • An individual whose total income includes Business or Professional income.
  • A taxpayer earning income from Partnership Firm can not file ITR-2. For declaring these types of Income, you may file ITR-3 or ITR-4.

File ITR 2 Online using Income Tax Website

  1. General Information

    Fill in the general information which consists of your contact, personal information, filing status & bank details.

  2. Schedule Salary, House Property & Other Sources

    In Schedule Salary, you need to review, enter, edit details of your income from salary or pension, exempt allowances and deductions u/s 16.
    Under schedule house property, you need to review, enter & edit details relating to house property (self-occupied, let out, or deemed let out). The details include co-owner details, tenant details, rent, interest, pass through income etc.
    and, under schedule other sources, you need to review, enter and edit details of all your income from other sources, including (but not limited to) income charged at special rates, deductions u/s 57 and income involving race horses.

  3. Schedule Capital Gains

    Capital Gains arising from sale or transfer of different types of capital assets have been segregated. In a case where capital gains arises from sale or transfer of more than one capital asset, which are of same type, please make a consolidated computation of capital gains in respect of all such capital assets of same type. But in case of transfer of land / building, it is mandatory to enter the computation towards each land / building. In Schedule Capital Gains, you need to enter details of your short term and long term capital gains or Losses for all types of capital assets owned.

  4. Schedule 112A & Schedule 115AD(i)(iii) Proviso

    Under Schedule 112A, you need to review, enter and edit details about sale of equity shares of a company, an equity-oriented fund, or a unit of a business trust on which STT is paid.
    Schedule 115AD (1)(iii) proviso involves entering the same details as for Schedule 112A but is applicable to non-residents.

  5. Schedule Current Year’s Loss Adjustment (CYLA)

    In Schedule Current Year’s Loss Adjustment (CYLA), you will be able to view details of income after set-off of current year losses. The unabsorbed losses allowed to be carried forward out of this are taken to Schedule CFL for carry forward to future years.

  6. Schedule Brought Forward Loss Adjustment (BFLA)

    You can view the details of income after set-off of brought forward losses of earlier years.

  7. Schedule Carry Forward Loss

    You can view the details of losses to be carried forward to future years.

  8. Schedule VI-A

     you need to add and verify any deductions you need to claim under Section 80 – Parts B, C, CA, and D of the Income Tax Act.

  9. Schedule AMT

    You need to confirm the computation of Alternate Minimum Tax payable u/s 115JC.

  10. Schedule AMTC

    You need to add details of tax credits u/s 115JD.

  11. Schedule SPI

    You need to add the income of specified persons (e.g. spouse, minor child) that is includable or required to be clubbed with your income as per Section 64.

  12. Schedule EI

    You need to provide your details of exempt income i.e., income not to be included in total income or not chargeable to tax. The income types included in this schedule include interest, dividend, agricultural income, any other exempt income, income not chargeable to tax through DTAA and pass through income which is not chargeable to tax.

  13. Schedule SI

    You will be able to view the income that is chargeable to tax at special rates. The amount under various income types are taken from the amounts provided in the relevant Schedules i.e., Schedule OS, Schedule BFLA.

  14. Schedule PTI

    You need to provide details of pass through income received from business trust or investment fund as referred to in section 115UA or 115UB.

  15. Schedule Foreign Source Income (FSI)

    You need to report the details of income, which is accruing or arising from any source outside India. This schedule is available for residents only.

  16. Schedule TR

    You need to provide a summary of tax relief which is being claimed in India for taxes paid outside India in respect of each country. This schedule captures a summary of detailed information furnished in Schedule FSI.

  17. Schedule FA

    You need to provide details of foreign asset or income from any source outside India. This schedule need not be filled up if you are Not Ordinarily Resident or a Non-Resident.

  18. Schedule 5A & Schedule AL

    In Schedule 5A, you need to provide the information necessary for apportionment of income between husband and wife if you are governed by the system of community of property under the Portuguese Civil Code 1860.
    If your total income exceeds ₹50 lakh, it is mandatory to disclose the details of movable and immovable assets in Schedule AL along with liabilities incurred in relation to such assets. If you are a non-resident or resident but not ordinarily resident, only the details of assets located in India are to be mentioned.

  19. Tax Paid

    Under Part B, verify all the auto populated rows from the details that you had entered in the schedules. Verify the tax paid details from the previous financial year.

  20. Login to efiling portal

    Login to the income tax efiling portal, i.e, the IT Portal 2.0

  21. File Income Tax Return

    Click on eFile > Income Tax Returns > File Income Tax Return

  22. Assessment Year and Mode

    Select the appropriate assessment year and select the online mode and click on proceed.

  23. ITR Form

    Select the appropriate ITR Form, in this case, ITR 2.

  24. Select the checkboxes

    Next, select the checkboxes applicable to your situation.

  25. Review and File ITR

    Finally, review all the details that you had entered previously and pay the tax dues (if any) and submit the return. Once you submit the return, proceed to everify it to complete the process.

Structure of ITR-2

Part/ Schedule Heading Fields
PART A- GENERAL Personal Information Name, Address, Date of Birth, PAN, contact details.
Filing Status Employer Category, Tax status, Residential status, Return filed under the section.
PART B-TI Computation of total income Total Income from all income sources, Losses of the current year set off, Gross Total Income, Deductions under Chapter VI-A.
PART B-TTI Computation of tax liability on total income The Bank Account details, Verification, and TRP details (if any) are to be provided. 
Schedule IT Details of Advance Tax and Self Assessment Tax Payments BSR code, Date of Deposit, Chalan number, Tax Paid
Schedule TDS TDS1: Details of Tax Deducted at Source from SALARY TAN of Employer, Employer Name, Tax Deducted, etc.
Schedule TDS TDS2: Details of Tax Deducted at sources from Income other than Salary (As per FORM 16A) & Details of tax deducted at source on sale of immovable property u/s 194IA (Form 26QB) TAN, Name of Deductor, Year of Deduction, Tax deducted, etc.
Schedule TCS Details of tax collected at source TAN of the collector, Name of Collector, Tax Collected, etc.
Schedule S Details of Income from Salary Name and PAN of the Employer, Address of the Employer, Salary, Perquisites, Allowance, etc.
Schedule HP Details of Income from House Property Details of House Property, Name and PAN of the Co-owners and Tenants, Details of Rent Income, Interest payable on Borrowed Capital, etc.
Schedule CG Capital Gains Details about the Short term and Long term Capital gains, Sales consideration, Cost of Acquisition, Deductions under Section 54,54B,54EC,54F,54GB.
Schedule OS Income from Other Sources A dividend, Interest, Rental income from machinery, Winnings from lotteries, Crossword puzzles, Races, Games.
Schedule CYLA Details of income after set­off of current year losses Details of current year losses and its Inter Headset off
Schedule BFLA Details of income after Set off of Brought Forward Losses of earlier years Details of brought forward losses set off against current year’s income, total brought forward losses set off.
Schedule CFL Details of Losses to be carried forward to the future years Total of earlier year losses, current year losses, Total of carried forward to future years.
Schedule VI-A Deductions under Chapter VI-A Deductions under section 80C, 80CCC, 80CCG, 80D, 80DDB, 80E, 80G, 80TTA.
80G Details of Donations Name of Donee, Address, City or District, State Code, PAN of Donee, Amount.
Schedule SPI The income of specified persons (spouse, minor child, etc.) included in the income of the assessee (income of the minor child, in excess of Rs. 1500 per child, to be included) Name and PAN of Person, Relationship, Nature of Income, Amount.
Schedule SI Income chargeable to income tax at special rates Description of Special Rate Income, Special Rate, Income, Taxable Income after adjusting min. chargeable to tax, Tax thereon.
Schedule EI Details of Exempt Income (Income not to be included in Total Income) Interest income, Dividend, Agricultural Income.
Schedule PTI Details of Income from Business Trust or Investment Fund  Details of Income earned from Business Trust or Investment Fund as per section 115UA, 115UB. 
Schedule FSI Details of Income from outside India and tax relief A country, Head of income, Income from outside India, Tax paid outside India, Tax payable in India, Relevant article of DTAA if relief is claimed u/s 90 or 90A
Schedule TR Summary of tax relief claimed for taxes paid outside India Details of tax relief claimed
Schedule 5A Information regarding the appointment of income between spouses governed by Portuguese Civil Code Name and PAN of a spouse, Income received under different heads, Amount appointed in the hands of the spouse, TDS details.
Schedule FA Details of Foreign Assets and Income from any source outside India Details of foreign bank accounts, financial interest in any entities, Immovable Properties, Other Capital Assets.
Schedule AL Details of Assets and Liabilities Details of an immovable asset, Details of a movable asset, Interest held in the asset of a firm or AOP.

Document Checklist

You should gather the following documents for a smooth process.

Essential documents:

  • PAN (Permanent Account Number)
  • Aadhaar Card
  • Bank account details
  • TDS certificates
  • Challan of taxes paid
  • Details of original return if filing revised return
  • Details of notice if filing in response to the notice

Documents on the basis of a type of Income:

  • Salary Income
  • House/Property Income
    • Co­owner details in case the property is co­owned,
    • Address of the property,
    • In case of house/property loan ­ Interest certificates/repayment certificate from a bank,
    • In case of let out property Rent agreement.
  • Other sources
    • Savings/current account statements/Passbook.
    • Interest certificates for deposits/bonds/NSC.
    • PPF account statement/Passbook.
    • Dividend warrants/counterfoils.
    • Rent agreement in case of let out machinery.
    • Details about receipts of any other income.
  • Capital Gains
    • For land/building ­ Sales & Purchase deeds, stamp duty valuation.
    • Details of improvement costs.
    • For securities ­ Contract notes/stock ledgers/trading statement.
    • For other capital assets ­ Cost of purchase, cost of improvement & sales receipts.
    • Details of expenses incurred on a transfer of capital assets.
    • Details of investments in order to claim exemptions.
    • Capital gains deposit account details if any.
  • If you’re eligible for any Section 80 Deductions, you may need to acquire the relevant documents from the list:
    • PPF account statement/Passbook.
    • Fixed deposit certificates/statements.
    • ELSS/ULIP/NSC investment details.
    • Life insurance premium receipts.
    • Medical insurance premium receipts.
    • House/property loan interest certificate/repayment statement.
    • Education loan interest certificate/repayment statement.
    • Tuition fees receipts.
    • Donation receipts.
Earned Capital Gain during the year?
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Sample ITR-2 Form for AY 2021-22

Income Tax Calendar
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Income Tax Calendar
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Major Changes in ITR 2 for AY 2021-22

  • Taxpayers are given the option to choose between the old tax regime and the new tax regime
  • Dividend Income has to be added with a quarterly breakdown for accurate calculation of Interest under Section 234C

Major Changes in ITR 2 for AY 2020-21

  • RNORs and non-resident individuals have to file their income ITR 2 even if the income is below INR 50 Lakh
  • Taxpayers must disclose:
    • Amount of cash deposits above INR 1 Crore in the current accounts with a bank,
    • Expenditure incurred above INR 2 Lakh on foreign travel, or,
    • Expenditure incurred above INR 1 Lakh on electricity
  • Resident individuals owning more than 1 house property must file ITR 2
  • Taxpayers having income from business and profession cannot file ITR 2
  • Type of company needs to be disclosed if the taxpayer is a director in a company or holds unlisted equity investments
  • A separate section 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.
Check which ITR Form to file?
Income Tax Return Forms to file depends on your Income Source, Residential Status, and other financial situation. Know which ITR Form you should file.
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Check which ITR Form to file?
Income Tax Return Forms to file depends on your Income Source, Residential Status, and other financial situation. Know which ITR Form you should file.
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FAQs

Can NRI file ITR 2?

Yes, NRI can file ITR-2, if NRI is earning any salary income, rental income, capital gain income, or interest income.

Can I file ITR 2 in case of income from partnership firm?

No. If you are a partner in partnership firm/LLP then you need to file ITR-3. You need to enter details of the firm in which you are a partner and then add details of your income form that firm.

Can I file ITR 2 after the due date?

Yes, it can be filed after the due date. It will be considered a belated return. And late filing fees will be levied while filing a belated return.

Can I file ITR 2 if I have sold the house during the year?

Any consideration received from the sale of a property will be covered under the head income from Capital Gain. Hence you can file ITR-2 for reporting capital gain.