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Tax Query: How to get TDS certificate from mutual funds?

November 27, 2021 root Personal Finance

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I have a few doubts with respect to my ITR for FY 2020-21 i.e. current AY 2021-22. I have invested ₹20,000 in Templeton India Equity Income Fund in 2006 under NFO. Since then periodical dividends declared under the scheme are getting credited to my savings a/c through ECS regularly and are accounted for in my ITR returns of the respective financial years. Since the Finance Act 2020 is modified and the dividends are now taxable in the hands of investors, the mutual fund has deducted TDS and paid the balance of the dividend to my savings account. Since I have not received Form 16 A for the TDS made by the mutual fund, I have sent a mail to the RTA of the MF. Initially, they have asked for a self-attested copy of my PAN card which I have provided to them. Now the RTA has replied that my PAN was not registered in FY2020-21 with them and was registered subsequently and hence, they are unable to fetch the TDS certificate for the FY2020-21. Since, the TDS was deducted on the dividend amount paid to me, kindly inform me how I can obtain TDS certificate and show them in my returns.

I also request you to kindly inform me how to show them in the current ITR in the absence of Form 16A.

Further, I am a retired pensioner and an amount of ₹15 lakh is invested in PMVVY Scheme and am receiving quarterly amount. Please clarify under what head should the amount be shown. Apart from my pension, during the year I have incomes including interest on bank deposits, dividend income from shares and MFs, interest income from NCDs, sovereign gold bonds, savings bank A/c, infra bonds, interest on NHAI tax-free bonds and short term & long-term capital gains. I have one self-occupied house property. My total income during the year is less than ₹50 lakh and I do not have any agriculture income. In the light of the above, I request you to kindly inform me which ITR return I have to file?

Rama Krishna

Dividend shall be taxable under the head ‘Income From Other Sources’ (IFOS) as per the Act. If your PAN is available with brokerage company/fund manager, the taxes deducted would be reported in your Form 26AS based on which the TDS credit can be claimed in the tax return. Where the company has not deposited the TDS/filed the TDS return, due to absence of your PAN details, you are required to complete the KYC formalities and provide the scanned copy of PAN to enable them to do the needful.

Pension income earned from Prime Minister Vaya Vandana Yojana Scheme (PMVVY) of LIC of India is fully taxable and shall be reported under the head IFOS. Please be informed that bank interest, dividend income from shares/mutual funds, interest income from infrastructure bonds, NCDs and sovereign gold bonds shall be taxable under the head IFOS. Short term capital gain/long term capital gain on sale of shares needs to be reported under the head capital gains.

Considering your income pattern, you are required to file ITR 2 for the FY 2020-21.

In the issue dated September 5, 2021, you have mentioned that if money is gifted to relatives, any interest earned out of that will be taxed in the hands of the recipient only. In a similar manner If shares allotted in an IPO are gifted to spouse, and if they are sold within a period of one year, will the short term capital gain be taxed in the hands of the recipient of the gift? If yes, what sort of record should be kept?

Niranjan

Your spouse is not required to pay any tax on receiving shares from you as a gift. However, Section 64(1)(iv) of the Act provides for clubbing of income in the hands of the transferor when assets are transferred for inadequate consideration. Providing gifts to your spouse would amount to transfer for inadequate consideration. Accordingly, any gains arising from sale of such shares is taxable in your hands. Besides documentation evidencing cost of acquisition of shares, sale consideration, selling expenses, etc., and documentation related to gift (like gift deed) needs to be kept on record.

The writer is Partner, Deloitte India

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Claiming TDS on interest income from bank A/C jointly held with late parent

September 11, 2021 root Personal Finance

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My father-in-law P V Krishan (late) and my wife Premaramani are joint SB and FD A/c holders with a leading private sector bank in Besant Nagar since 2003/04. The mode of operation was either/survivor. P.V. Krishnan passed away in Chennai on 16.12.2017.

Similarly, Kamala Krishnan (late) and Premaramani were having both FD and SB accounts with the same bank in Besant Nagar. Kamala Krishnan passed away on 18.02.2018 in Chennai. We handed over the copies of death certificate of P V Krishnan and Kamala Krishnan to the bank branch in Besant Nagar in the month of March 2018 with a request to delete the names. Both were senior citizens. They were submitting Form 15H every year, i.e. up to 31.03.2018. The branch deducted TDS of both deceased for the year 01.04.2018-31.03.2019. Both the savings bank and FD were in the either or survivor mode. For the FY (01.04.2019-31.03.2020), the branch made PAN correction and TDS amount of Kamala Krishnan (late) was added to Premaramani. She filed IT return in October 2020 and claimed refund from Income Tax.

Premaramani is a homemaker and she doesn’t have any income other than interest on FDs.

In view of the above, we request you to offer your guidance on claiming the TDS.

Ramani N.V.

In order to claim credit of taxes deducted at source (‘TDS’) and any consequential tax refund, one needs to file the income tax return in specified tax return forms for that year by offering the income in their hands and claiming the credit of corresponding TDS. Thus, to claim the refund of TDS deducted by bank on interest earned from fixed deposit, Premaramani would be required to file her income tax return, offering income in her hands, including interest incomes of both P V Krishan (Late) and Kamala Krishnan (Late). Further, I understand that Premaramani’s only source of income is the said interest from savings bank account and fixed deposits. Considering the nature of income and subject to fulfilment of other conditions, she can file her return in Form ITR – 1 for FY 2020-21 (extended due date being September 30, 2021 for non-tax audit cases). TDS, as deducted by bank, would be required to be reported in the TDS schedule of the ITR form.

Separately, if the estimated total income of Premaramani, after including the interest income stated above, is expected to be below the taxable threshold (i.e. ₹2.5 lakh / ₹3 lakh in case of a senior citizen), she may also consider filing a declaration in Form 15G or Form 15H (for a senior citizen), with the payor bank for non-deduction of TDS on the interest paid. For this purpose, a senior citizen means a person who has attended the age of 60 years, anytime during the previous year.

In relation to FY 2018-19, if the tax return was not filed by Premaramani and tax refund (if any) was not claimed earlier, due dates for filing a late return has elapsed (extended due date to file a late return was November 30, 2020). However, in such a case, you may approach the Central Board of Direct Taxes (CBDT) under provisions of section 119(2)(b) of the Income-tax Act, 1961 (‘the Act’), requesting for specific permission for filing of belated tax return. If such permission is granted, return can then be filed to claim the refund.

The writer is a practising chartered accountant

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Tax Query: TDS on capital gains for NRI investing in MFs with power of attorney

August 28, 2021 root Personal Finance

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My son Prabaharan is an NRI. I am investing in mutual funds for him basis a power of attorney. The payment is made from the joint savings account of Prabaharan and myself (Indian resident account). In the circumstances stated above, is it necessary to deduct TDS from the capital gains?

K. Ramachandran

As per the provisions of section 196A of the Income-tax Act, 1961 (‘Act’), every person responsible for paying to Non-Resident any income in respect of prescribed mutual funds, shall deduct taxes at source (‘TDS’) at 20 per cent on such income, at the time of credit or payment whichever is earlier. I understand that your son is the legal owner of the mutual funds and qualifies to be a non-resident in India and is receiving income in the nature of Capital Gains on transfer of mutual funds. As per the above-mentioned provisions, TDS would be deducted by the payer at 20 per cent of such Capital Gains at the time of credit or payment, whichever is earlier. Please note that for your query, I have not analysed and commented on any exchange control regulations / legal aspect.

My father (aged 61 years) retired in March 2020 and invested ₹15 lakh in senior citizen savings scheme in post office in May 2020. Is the amount invested eligible for 80C for all the five years, or it is only for the first year? Is the amount enough to fulfil the entire ₹1.5 lakh limit under 80C for all the 5 years?

Gokulanathan K

As per the provisions of Section 80C of the Income-tax Act, 1961 (‘Act’), the deduction is available in respect of any sum paid or deposited (as specified in the said section) during the concerned Financial Year (‘FY’), subject to a maximum eligible deduction of ₹150,000. Accordingly, for the amount contributed in May 2020, the deduction available to be claimed in your father’s hands would be for FY 2020-21, which shall be restricted to ₹150,000 (i.e. only for the year in which the amount is deposited in an account under Senior Citizen Saving Scheme). The amount invested during FY 2020-21 would not be eligible for deductions in future years.

The writer is a practising chartered accountant

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Tax Query: How daughter can claim TDS share related to joint bank account after mother’s death

May 22, 2021 root Personal Finance

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For a query (published on April 18, 2021) relating to sharing of income and claiming of TDS of a deceased lady by the legal heirs, it was advised that one of the legal heirs – her daughter – will be required to claim credit for proportionate share of TDS in her hands along with proportionate share of interest income. How is it possible to claim this TDS, which will not be reflected in Form 26AS? In my opinion the legal heir has to file the return of income on behalf of the deceased person claiming the TDS. Afterwards, the deposit with interest till her date of death, which will be transferred to the nominee, has to be shared by the legal heirs according to their eligible share. Please clarify.

CA. M. LakshmananMy response published to the query in the April, 18, 2021 edition was in relation to the reporting and filing of the tax return for second holder (i.e. deceased’s daughter) and her siblings and did not include comments for the tax filing of deceased. The query stated that since the name of first holder ( deceased) was removed from bank FD records and the second holder was made a primary holder, accordingly bank had deducted tax at source (TDS) in second holder’s name and PAN. Since TDS was in daughter’s name, she is required to claim credit of her share of proportionate TDS in her hands along with corresponding share of interest income (to the extent of funds belonging to her).

The balance TDS (for siblings’ share) and corresponding incomes will be required to be passed on to respective siblings. Such bifurcation of income and taxes shall be required to be appropriately reported in daughter’s income tax return form (under TDS schedule) for Financial Year in which tax has been deducted. When the other persons file their tax return, they will give similar details in their return. The system captures this information and is able give proportionate credit of TDS to people who are taxable on such proportionate incomes. Correspondingly, similar reporting under schedule TDS of the income tax return form shall be required to be done by the siblings for claiming TDS reflecting in their sister’s PAN.

In case of deceased’s tax return filings, the same would be required to be done by the legal representative as per provisions of the Income-tax Act, 1961, wherein the legal representative shall be required to register online on income-tax portal. Once the same is approved, the legal representative would be required to file the income tax return on behalf of the deceased through his/her e-filing portal. Such legal representative shall be responsible for any liabilities due for such deceased.

The writer is a practising chartered accountant

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