LTCL may be carried ahead for eight FYs


My father is over 80 years outdated and his earnings for monetary yr 2020-21 is as follows: short-term capital achieve of 1.2 lakh; long-term capital lack of 1.1 lakh; financial savings account curiosity of 4,000; fastened deposit curiosity of 20,000; NRI present obtained of 10 lakh; and resident Indian present of 2 lakh.Does he must file earnings tax return? If sure, during which type? Can we set off the short-term capital achieve with the long-term capital loss? Ought to we present the financial presents within the earnings tax return? If sure, below which head or a part of the shape?

—Anil Jain

We now have assumed that your father is an Indian tax resident and isn’t into common buying and selling in shares. The positive factors have, subsequently, been assumed to be within the nature of capital positive factors.

As per provisions of earnings tax legislation, long-term capital loss (LTCL) may be set off solely towards long-term capital achieve (LTCG). Accordingly, the LTCL incurred by your father won’t be eligible to be set off towards short-term capital positive factors (STCG). Your father can carry ahead the LTCL for eight FYs instantly succeeding the present FY and set off the identical towards future LTCG.

To allow your father to hold ahead the LTCL, he shall be mandatorily required to file his earnings tax return (ITR) inside the prescribed tax submitting due date.

The place a present is obtained from a specified relative, the transaction of the present itself won’t give rise to any earnings tax implications within the palms of the receiver (i.e. your father). Nonetheless, in case present(s) are obtained from non-relatives and the combination of such presents exceed 50,000, the complete quantity obtained shall be topic to tax in India.

Accordingly, taxability of the presents obtained shall be decided based mostly on whether or not or not the present has been given by a relative of your father.

From a disclosure perspective, the taxable quantity of present is required to be reported as earnings below Schedule OS in Kind ITR-2. Non-taxable presents needn’t be reported within the ITR.

Additionally, please notice {that a} deduction of as much as 50,000 is accessible for curiosity earnings for senior residents (on each fastened deposit and financial savings curiosity). As your father’s whole curiosity earnings is 24,000, a deduction of the complete quantity shall be obtainable.

Typically, a resident particular person who’s of the age of 80 years or extra is required to file a tax return in India if his taxable earnings (previous to prescribed deductions) exceeds 5 lakh, topic to sure different exceptions not relevant within the instantaneous case.

In your father’s case, if the entire earnings (after contemplating taxable presents) exceeds 5 lakh and/or your father desires to hold ahead the LTCL, he can be required to file his tax return.

Additional, as per the earnings sources offered, your father can be required to file his ITR utilizing Kind ITR-2.

Parizad Sirwalla is companion and head, world mobility providers, tax, KPMG, in India.

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