Category: Tax Planning

Six Common Queries for Filing Income Tax Returns

1) My salary does not fall in any taxable income slab. Should I file my tax returns?

As a resident Indian or an NRI, you have to file income tax returns if you fulfil any of the conditions mentioned below –

  • You are under the age of 60 years and your gross total income exceeds ₹ 2,50,000
  • You are above the age of 60 and your gross total income exceeds ₹ 3,00,000
  • You are above the age of 80 and your gross total income exceeds ₹ 5,00,000

The process to file tax returns is quite streamlined and hassle free. Filing tax returns is useful when you want to apply for a loan, claim tax refund or get a visa.

2) What are the new rules regarding taxation on house property?

There are multiple changes regarding taxation rules with respect to house property –

 Rental Income

Until now, the second house that you owned was treated as ‘rented out’ even if you had not given it for rent. You had to pay tax on the deemed rental income. But with a recent change in the tax provisions, you need not pay tax on the second house if it is not rented out.

Capital Gains

Until now, you could buy only one property using the profits from sale of an owned property. But now the profits can be used to buy two houses.


It has to be kept in mind that now, the overall interest deduction u/s 24 for both the self-occupied houses will be restricted to ₹ 2,00,000.

3) I have made losses in sale of house property and sale of stocks. How do I account for these in the tax returns?

Capital losses are incurred when you sell a house property for a loss or sell shares at a loss.These losses can be set off against certain income heads. This will help to reduce taxable income, thus reducing tax liability.

Capital losses can be set off against capital gains subject to certain conditions –

  • Loss incurred on sale of a short-term capital asset can be set off against gain from sale of long-term or short-term capital asset.
  • Loss incurred from sale of a long-term capital asset can be set off only against long-term capital gain
  • If the entire loss amount cannot be set off in the financial year that it was incurred, it can be carried forward up to 8 years immediately succeeding the assessment year in which the loss has incurred.

Let us look at an example –

Rishi made a capital gain of ₹ 10,00,000 on sale of his house. In the same financial year, he made a long-term loss of ₹ 2,00,000 in sale of shares. The capital gain can be offset by the loss and the capital gain for the year will be accounted as ₹ 8,00,000.

If Rishi had made a short-term capital gain of ₹ 2,00,000 and a long-term capital loss of ₹ 1,00,000, there will be no set-off as long-term capital loss can be adjusted only against long-term capital gain.

If Rishi had made a long-term capital gain of ₹ 1,00,000 and a long-term capital loss of ₹ 2,00,000; then loss up to the extent of the gain can be set off. So here, only ₹ 1,00,000 will be set off against the gain. The remaining loss of ₹ 1,00,000 can be carried forward to the next assessment year.

4) What are the benefits available for senior citizens in terms of medical expenses and medical insurance?

The proportion of medical expenses in the personal budget rises as one grows old. The taxation policy gives some concessions for medical expenses  –

  • If you or your parent is a senior citizen who does not have a medical insurance policy, you are allowed a deduction for medical expenses up to ₹ 50,000 in the financial year – 2018-2019 under Section 80D. The payment has to be made via any mode except cash. Cash transactions are not considered for deductions.
  • The maximum amount that can be claimed as a deduction for medical expenses incurred under section 80D is ₹ 50,000 provided the senior citizen does not have any health/medical insurance policy. The payment here too should be made via any channel such as net banking, cheque, mobile wallets etc to avail of the deduction.
  • A deduction of ₹ 5,000 is allowed for payment towards preventive health check-up provided it is within the maximum amount of ₹ 50,000 allowed under Section 80D. In this case, cash payments can be considered for deduction.
  • Senior citizens and Super senior citizens can avail a deduction from taxable income up to ₹ 1,00,000 towards amount actually spent for medical treatment of specified diseases such as neurological diseases, malignant cancers, chronic renal failure, hematologic disorders and neurological diseases (subject to certain conditions) etc. under Section 80DDB.

5) Can income earned by a minor child be clubbed with parents’ income?

A minor (person less than 18 years) might earn income from passive investments or using his/her talents or skills.

Here are the rules regarding clubbing of income with the parents’ income –

  • If the income is earned in the form of interest or other such passive forms, it will be clubbed with the income of the parent who has a higher income.
  • If the income is earned via manual work, knowledge, talent, skill etc, it cannot be clubbed with the parent’s’ income.
  • If the income is earned by the minor who is suffering from a disability specified in Section 80U of Income Tax Act, it will not be clubbed with the parent’s income.

It is important to note that if the parents are living separately or divorced then the child’s income will be clubbed (based on above conditions) with the income of the parent who is responsible for maintaining the child.

6) What are the consequences of not filing IT returns by July 31, 2019 for financial year 2018-2019?

There are certain consequences if you do not file a return but your income is taxable and you are required to file a return –

Penalty Details Filing Date between 1st Sep 2019 & 31st Dec 2019 Filing Date between 1st Jan  2020 & 31st Mar 2020
Penalty for Income below ₹ 5,00,000 ₹ 1,000 ₹ 1,000
Penalty for Income above ₹ 5,00,000 ₹ 5,000 ₹ 10,000

The assesses will also have to pay interest on tax amount payable.

Moreover, there can be prosecution as well. One can be imprisoned from 3 months to 2 years  depending on the amount of tax evaded.

Vidya Kumar 

Dilzer Consultants Pvt Ltd

5 June 2019