certicom tax updates

Who has to file income tax return mandatorily? 

As per income tax laws, ITR must be mandatorily filed if a resident individual’s total income during the financial year exceeds the basic exemption limit. Remember, the basic exemption limit for an individual depends on his/her age.

ITR filing documents you need for FY 2020-21 

While receiving Form-16, one must check that the PAN mentioned on it is yours. If there is any discrepancy, then you must bring this to your employer’s notice. Your employer will rectify the mistakes in Form-16 and issue you a revised form.

Removal of Inverted Tax Structure on MMF Textiles

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Which ITR form is applicable to you for FY 2020-21? 

It is important to ensure that income tax return is filed using correct ITR form for FY 2020-21. If correct ITR form is not used, then filed tax return can be termed as defective ITR.

How to file ITR-1 with salary income, home loan, other incomes for FY 2020-21

Salaried individuals have to use the ITR-1 form to file their tax returns. A resident individual having total income up to Rs 50 lakh from salary, one house property and income from other sources can file his tax return using Form ITR-1.

How to check income tax refund status

How to check income tax refund statusIncome tax refund will be payable to you only after the tax department processes your ITR and confirms the same through intimation notice. Here is how you can check the status of tax refund.

How much tax is levied on the selling of unlisted shares?

How much tax is levied on the selling of unlisted shares?

The bull market in listed stock markets has led to a bull market in unlisted stock markets, where investors buy and sell shares in private companies (such as Reliance Retail and HDFC Securities) that are not currently listed on the NSE or the BSE. Unlisted stock prices have also risen significantly in the last year, resulting in substantial returns for investors. These shares are purchased through brokers/direct sellers on unlisted markets and sold in a similar manner on unlisted marketplaces. Because these equities are not sold on a regulated stock exchange, no STT (security transaction tax) is applicable, and the manner in which taxes are applied differs from that of listed securities.

The following is the tax rate on the selling of unlisted shares:

The tax rate on profits realised on the sale of these shares would be determined by whether the shares are long or short term.

1. The long-term capital gains (LTCG) tax rate is 20% if the holding period is more than 24 months (with indexation benefit)

2. If the holding period is less than 24 months, the short-term capital gains (STCG) tax is calculated according to the slab rates.

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When it comes to listed stocks, shares held for more than 12 months are considered long term and are subject to a flat 10% tax. A flat 15% tax will be imposed if the listed security is held for less than 12 months.

Capital gains are calculated in the following way:

The fair market value of unquoted shares must be ascertained before capital gains may be calculated. The higher of the actual sale price and the sale price for tax purposes would then be considered the sale price. The cost of acquisition, as well as any transfer expenses, would be removed from the above-mentioned value. Indexation would be allowed in the case of long-term capital gains, and we would use the “indexed cost of acquisition” instead of the “actual cost of acquisition.” Under Section 54F, the LTCG exemption can also be claimed by investing the money in a residential property.

ITR submission:

A person who owns unlisted shares must report them on his or her income tax return. Only ITR-2 and ITR-3 can be employed in this instance, as ITR-1 and ITR-4 are not applicable. If an individual has business income in addition to capital gains from stock sales, these profits must be stated in ITR-3. These gains would be reported in ITR-2 if the person did not have any business income.

In the event of STCG, these must be declared in Schedule CG at Point No. A5; in the case of LTCG, they must be disclosed in Schedule CG at Point No. B9.

It should be noted that even if an individual does not buy or sell any unlisted shares during the year, but just holds unlisted shares purchased in prior years, he or she must disclose these unlisted shares in the ITR.

Cryptocurrency investors are rushing to get tax guidance.

At Point (j) of Part A- General, information on the starting balance of securities on the first day of the financial year, the shares purchased/sold, and the closing balance of securities on the last day of the financial year would be needed to be revealed. This is one of the most typical blunders made by people who own unlisted stock; they only report it in the year of sale on their ITR. It’s worth noting that if a person had any unlisted shares at any point during the year, even if no transaction occurred, they must be stated in the IT return.

Set out on your journey:

If the shares are sold at a loss, the loss cannot be offset against any other source of income, such as a salary, a house, company income, or other kinds of income, but only against capital gains.

Only LTCG can be used to offset a long-term capital loss on the sale of unlisted shares. Short-term capital loss, on the other hand, can be deducted using both LTCG and STCG. If any loss remains after set-off, it can be carried forward for another eight years and offset with capital gains that may accrue in that time.

Do you receive dividends on a regular basis? Beware! This year, you must pay tax and report it on your ITR.

Do you receive dividends on a regular basis? Beware! This year, you must pay tax and report it on your ITR.

Many consumers choose the dividend payment option while investing in mutual fund (MF) schemes in order to receive regular income while remaining invested. People who invest in direct equity can get dividends based on the amount of profit made by the companies.

Dividend income is now taxed differently.

Companies and fund houses had to pay Dividend Distribution Tax (DDT) before distributing dividends until the fiscal year (FY) 2019-20, while dividend amounts received were tax-free in the hands of investors.

As a result, investors used to get the same tax treatment regardless of their tax status.

However, since the repeal of DDT, things have changed, and dividend income is now taxable in the hands of investors.

“The Finance Act of 2020 altered the provisions of the Income Tax Act of 1961 (“the Act”) relating to the taxation of dividend income. Dividends were previously taxed in the hands of the firm paying the payout. Dividend Distribution Tax (DDT) was due from the firm paying the dividend under section 115-O of the Act. Dr. Suresh Surana, Founder, RSM India, added, “Moreover, such dividend received was exempt in the hands of shareholders u/s 10(34) of the Act.”

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As a result, investors in higher tax bands must pay a higher tax rate on dividend income than investors in lower tax brackets.

“The Finance Act of 2020 repealed the DDT concept and made dividends taxable in the hands of shareholders in accordance with the traditional dividend taxation system.” The modification took effect on April 1, 2020. As a result, for dividends paid on or after April 1, 2020, the firm distributing the dividend is not obligated to pay Dividend Distribution Tax (DDT), and the dividends are taxable in the hands of shareholders at the slab rates applicable to them,” Dr. Surana explained.

Tax rate

“As per section 56(2)(i) of the Act, dividends would typically be taxable under the head “Income From Other Sources” unless the shares are kept for trading purposes, in which case they would be subject to tax as Business income,” Dr. Surna explained. They will be taxed at the taxpayer’s standard rate of taxation. In addition, under section 57, the taxpayer cannot deduct any expense from dividend income other than interest on money borrowed for investment purposes. The interest expense deduction will likewise be limited to a maximum of 20% of the amount of gross dividends.

The Annual Information Statement released by Dept. Of Income Tax

TDS level

Companies and investment houses are now required to deduct tax at source (TDS) as dividend income has become taxable.

In relation to dividends given to residents, Section 194 of the Act provides TDS provisions. The firm distributing dividends must deduct 10% tax at the time of payment or distribution of dividends, according to this section. When a dividend is paid to a resident individual in any manner other than cash and the amount is less than Rs 5,000, TDS is not deducted. TDS provisions u/s 195 will apply to dividends given to non-residents, with a rate of 20% established by the Act. Non-resident shareholders, on the other hand, can take advantage of the withholding rates set forth in the tax treaties that their country has signed with India.

You can get the extra TDS amount back if your income is not taxable or if you are in the 5% tax level. Otherwise, depending on your income level, you will have to pay more tax than the TDS rate.