I am a senior citizen and have saving bank accounts in two banks. Recently, I filed my income tax return for AY 2019-20 but forgot to mention the interest income from one of these accounts. I have to pay tax on this income. How can I rectify this mistake?
Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: Taxpayers can file revised income tax return for assessment years 2019-20 up to 31 March 2020. But as you need to disclose your additional interest income on which you have to pay tax, you can revise your return till 31 July 2019 to save any penal interest on the incremental tax liability.
I bought a plot in 1996 and constructed a house on it in 1997-98. I added another floor to it in 2003-04. I have no record of the construction costs. How should I compute the capital gains tax if I sell the house?
Rakesh Bhargava Director, Taxmann replies: You can add the cost incurred on building the new floor to the cost of acquisition of the property only if you have evidence to show that you incurred the costs. As this property is a long-term capital asset, you have the option of assuming the market value as on 1 April 2001 as its cost of acquisition. This cost can be further adjusted on the basis of the cost-inflation index for the financial year in which the property is sold. You can then subtract this indexed cost of purchase from the selling price of the property to arrive at the capital gain.
How are gains from portfolio management services (PMS) taxed? Is the grandfathering clause applicable to PMS?
Ashok Shah Partner, N.A. Shah Associates replies: In case of PMS, shares and securities are held in the name of the taxpayer and the PMS adviser acts on his behalf. The income from the sale of shares through PMS will, therefore, be taxed in the same manner as any direct investment by the taxpayer. Similarly, as is the case with direct investment by a taxpayer, investments via PMS will also be eligible for the grandfathering benefit.