Latest news with #BombayCharteredAccountantsSociety
Mint
5 days ago
- Business
- Mint
Income Tax: Do you need an expert to file your ITR? Pros and cons explained
Income Tax: Fewer than 40 days remain before the September 15 deadline to file the income tax return (ITR) for FY25. Some taxpayers could be busy arranging necessary documents as advised by their chartered accountant, whereas others would be doing it all on their own. Those who opt for the DIY approach have their hands full - examining the documents i.e., Form-16 to 26AS, choosing the appropriate ITR form, selecting the right tax regime, evaluating total amount of deductions and computing the tax liability. But is it all feasible and advisable? Perhaps yes, if you have only one source of income and not too many nuances involved in your tax return. Alternatively, you could engage an expert -- a chartered accountant, and thereby outsource your responsibility to the one who knows tax provisions like the back of their hand. Experts recommend that taxpayers engage a chartered accountant when earning income from a myriad of sources. This helps ensure clarity and compliance and avoids mismatches between AIS and Form 26AS. 'A professional brings clarity, ensures compliance with the latest tax rules, and helps avoid mismatches with AIS or Form 26AS, which are becoming common triggers for scrutiny. Especially for anyone with multiple income sources, capital gains, or business income, expert guidance is essential,' says Kinjal Bhuta, Treasurer, Bombay Chartered Accountants Society (BCAS). Some taxpayers resist the idea of engaging a chartered accountant to avoid paying the fee. But the avoidance of inconvenience when an expert takes over is worth paying that fee for. When you pay ₹ 5,000 as a fee to the CA, it may look like an unreasonable sum, since you believe you could do it all by yourself. But if some anomaly creeps in -- the penalty or fine would far outstrip this humble sum of ₹ 5,000. It is, therefore, recommended to let the expert do this job. "Often the cost saving of not hiring a professional leads to huge tax litigation liability in future - straining the taxpayer's time, money and efforts. Many taxpayers unknowingly make mistakes—like misreporting income, selecting the wrong ITR form, or missing out on eligible deductions. These errors may seem minor, but can lead to notices, delayed refunds and even interest and penalties," Bhuta added. Importantly, when you engage an expert, the chances of getting a tax notice would be minimal. After all, the Income Tax (I-T) Act is a piece of legislation which needs to be interpreted and inferred correctly, and CAs are trained in doing this. 'ITR filing is not just about filing information in a form. It's about interpreting law, optimising tax and presenting correct information to avoid future litigation. For that, you should always consider an expert. Taxpayers should not be penny-wise, pound-foolish as spending money on compliance today helps to save big in future,' says Pratibha Goyal, a Delhi-based practising chartered accountant. Another argument experts make is that CAs tend to advise their clients about tax planning. 'CAs know all the provisions and therefore, can advise taxpayers about how they can save their tax, going forward. If someone uses online tools, then customised tax planning may not be as effective,' says Deepak Kumar Agarwal, a Delhi-based chartered accountant. For all personal finance updates, visit here
Mint
30-07-2025
- Business
- Mint
Selling property? The 12.5% tax may push you into a higher surcharge bracket
A change introduced by the government in 2024 to ease capital gains tax on real estate has inadvertently created a tax trap that could leave many individuals paying more than expected. The government had allowed taxpayers to choose between a lower 12.5% tax rate on long-term capital gains (LTCG) without indexation or a 20% rate with indexation from property sales. This applies to properties sold on or after 23 July 2024. The concession doesn't extend to surcharge and cess calculations, leading to a higher overall tax burden. This article explains the changes in LTCG on real estate and what can be done to ease the tax burden. Grandfathering benefit doesn't extend to surcharge The Finance Bill 2024 introduced the optional lower tax rate with retrospective effect for individuals selling land or buildings. 'The Finance Bill 2024 changed the tax rate on long term capital assets, being land or building for Individual and HUFs, from 20% to 12.5%. This change was brought with retrospective effect from properties which are sold on or after 23 July 2024," said CA Kinjal Bhuta, treasurer, Bombay Chartered Accountants Society. To protect older buyers, the government introduced a "grandfathering" clause, allowing those who purchased property before the cut-off to choose whichever option — 20% with indexation or 12.5% without — results in lower tax liability. However, this relief doesn't apply when calculating surcharge, which is based on total income, not the taxable income after indexation. This subtle but crucial detail is where taxpayers are getting caught unaware, experts say. 'Your capital gains from real estate get added to your total income, and that can push you into a higher surcharge bracket. This means, even if your salary is just ₹20 lakh, if your unindexed capital gains push your total income above ₹50 lakhs, surcharge will still kick in," said CA Gautam Nayak, partner at CNK & Associates LLP. How surcharge works Surcharge is an additional tax charged on the income tax payable when an individual's total income exceeds certain thresholds. The surcharge rate varies based on income slabs. If your total income falls between ₹50 lakh and ₹1 crore, a 10% surcharge is applied on the income tax. This increases to 15% for income between ₹1 crore and ₹2 crore, and 25% for income between ₹2 crore and ₹5 crore. There are certain cases where the surcharge is limited to 15%. This includes income from dividends, short-term capital gains under Section 111A (like gains from listed shares or mutual funds with STT), and long-term capital gains under Sections 112 and 112A (such as profits from selling real estate, unlisted shares, or listed shares where STT is paid and gains exceed ₹1 lakh). The 15% surcharge cap also applies to income earned by foreign portfolio investors under Section 115AD(1)(b). For associations of persons (AOPs)—entities formed by individuals or groups for a common purpose but not registered as companies—the surcharge is also capped at 15%. This ensures that AOPs are not burdened with excessive tax rates, even when their total income is high. Under the Income Tax Act, AOPs are treated as separate taxable entities. Where it hurts, an example Suppose you bought a property for ₹1 crore and sold it for ₹2 crore. Without indexation, your capital gain is ₹1 crore. With indexation, your cost rises to ₹1.5 crore, reducing the gain to ₹50 lakh. Add a ₹50 lakh salary, and your taxable income is ₹1 crore. But for surcharge purposes, income is treated as ₹1.5 crore — pushing you into the 15% surcharge slab instead of 10%. 'The choice to calculate capital gains with or without indexation is available solely for the limited objective of computing capital gains tax under Section 112. However, when it comes to determining total income, capital gains calculated without indexation are taken into account in the absence of similar relief", according to Ashish Karundia, chartered accountant and founder, Ashish Karundia & Co. In simple terms, you could owe no tax on capital gains due to indexation but still be liable for surcharge — a tax on tax. This is because the income tax utility considers your total gross income, including capital gains without indexation, for surcharge purposes. That disconnect between what's used for tax calculation and what's used for surcharge is at the heart of the problem. What experts say Experts say part of the confusion stems from how the income tax utility software is programmed. "The utility software is adding non-indexed capital gains to the total income for surcharge. That's how income tax utility coding has been done. Ideally, it should have been a corresponding gains calculation. If tax as per indexation calculation is to be considered, then indexed gains should have been considered," noted CA Pankaj Bhuta, founder of P.R. Bhuta & Co. According to Bhuta, the Supreme Court has in the past pulled up authorities over such mismatches — yet the problem persists. 'If the GTI (gross total income) increases beyond ₹50 lakh, then surcharge will continue to apply even in a case when there is no tax payable on LTCG. This may bring some absurd results and higher tax burden due to surcharge applicability." This leaves taxpayers in an odd position, choosing indexation might lower capital gains tax, but it may still increase surcharge liability, especially if the gross income crosses ₹50 lakh or ₹1 crore. The bottom line The disconnect between how tax is computed and how surcharge is applied has created an unintended tax trap for property sellers, according to experts. Choosing indexation may save tax but still push gross income past surcharge thresholds, leading to a higher overall outflow. Experts say a simple clarification or software correction could fix the issue. Until then, taxpayers using the new 12.5% LTCG option must tread carefully and consider not just the tax but also the surcharge.
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Business Standard
05-07-2025
- Business
- Business Standard
Market manipulation is not going to be tolerated: Sebi chief on Jane Street
Sebi chairman Tuhin Kanta Pandey said surveillance has been increased both by the regulator and also at the exchange level Sebi chairman Tuhin Kanta Pandey on Saturday made it clear that market manipulation is not going to be tolerated. Speaking with reporters a day after an interim order against New York-based hedge fund manager Jane Street, Pandey said surveillance has been increased both by the regulator and also at the exchange level. When asked if similar patterns have been seen with other foreign portfolio investors as well, Pandey said, "All what I can say that market manipulation is not going to be tolerated". He was speaking on the sidelines of an event organised by the Bombay Chartered Accountants Society. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
