Latest news with #ITAT
Mint
3 days ago
- Business
- Mint
Will money crowdfunded from relatives, friends to pay medical bills be taxed?
Any amount received without consideration from a relative would not be taxable and is specifically exempt under section 56(2)(x) of the Income Tax Act, 1961. In respect of your mother, amounts received from her brother would be considered as those received from a relative and would, therefore, not be taxable. In your case, the amount received from your maternal grandmother, as well as the wife of your mother's brother, would also be considered as received from relatives and would therefore not be taxable. In respect of the amounts received from your friends and your mother's friends, these could be considered as taxable in your hands as they are not received from relatives. While one could have taken a view that amount received with a clear condition for spending for a particular purpose should not constitute income in the hands of the receiver, a recent ITAT decision has held that such crowdfunded amount received is taxable in the hands of the recipient under section 56(2)(x). The ITAT decision was primarily based on the fact that there was a mixing of the funds raised from crowdfunding with personal funds, and that the funds were not fully utilised for the purpose for which they were raised. Accordingly, if you have received the funds in a separate bank account, which is then used to incur the hospital and rehabilitation expenditure, or if you can clearly substantiate the link between the funds received and the amounts incurred, you may be able to distinguish your case from the facts in this ITAT case. It may be possible to argue that the funds were received for spending for a specific purpose, were spent for that purpose, and that you were merely a channel for paying the funds on behalf of the contributors. Alternatively, one can also consider claiming a deduction for the hospital expenses incurred out of the amounts received, on the ground that incurring these expenses was the condition for receiving the crowdfunding amounts. However, the matter is highly debatable. Therefore, it would be necessary for you to maintain documents to substantiate that the amounts were received with the obligation to spend on hospitalisation and rehabilitation. Mahesh Nayak, chartered accountant, CNK & Associates.
Hindustan Times
3 days ago
- Business
- Hindustan Times
Mumbai property tax rises by 15% on average; flats under 500 sq ft remain exempt
The Mumbai Civic body, also known as the Brihanmumbai Municipal Corporation (BMC), has restructured property tax in the Mumbai real estate market by an average of almost 16%, according to a statement issued by the corporation. According to BMC, there has been no amendment or increase in the structure or rate of property tax. However, due to ready reckoner rates in Mumbai increasing from FY26, the property tax automatically stands to be increased, owing to the base of capital value going upwards. To cite an example, if the annual property tax for a flat owner was ₹50,000, it would now be above ₹57,500. The Brihanmumbai Municipal Corporation (BMC) has increased property tax for the first time in nearly a decade. The last revision took place in 2015, but the scheduled hike in 2020 was deferred due to the COVID-19 pandemic. Under Section 154 (1C) of the Mumbai Municipal Corporation Act, 1888, the capital value of properties must be revised every five years, which typically leads to an increase in property tax. Also Read: Major relief for homeowners: ITAT rules redeveloped flats not taxable as 'other income' According to the BMC, flats smaller than 500 sq ft have been exempted from property tax since 2022, and the decision taken earlier remains as it is. Hence, the BMC clarified that there is zero levy on these flats. There are 4,00,000 housing societies in Mumbai. BMC individually issues property tax bills to flat owners. The Maharashtra government announced in 2022 that it would waive property tax for flats below 500 sq ft, a move that it said would help citizens save ₹460 crore annually. Also Read: Mumbai's unsold luxury housing inventory rises 36% in Q1 2025 after two-year decline: ANAROCK The BMC announced on May 29 in a statement that it has deferred its much-debated fee on solid waste management, or garbage tax, in view of the increase in property tax. According to the BMC, the user fee was meant to cover the daily collection of solid waste from individual homes as well as commercial and industrial establishments. The levy was proposed in April; the fee ranges from ₹100 to ₹7,500, depending on the size and nature of the establishment. Also Read: Housing sales in top 15 Tier 2 cities fall 8%, sales value up 6% in Q1 2025: Report However, in view of the increase in property tax, Maharashtra Chief Minister Devendra Fadnavis and Deputy Chief Minister Eknath Shinde decided to defer the levy of the garbage fee.
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Business Standard
19-05-2025
- Business
- Business Standard
Selling two homes? New tax ruling says you can still save on capital gains
A recent ruling by the Income Tax Appellate Tribunal (ITAT), Mumbai, has clarified that taxpayers selling two different residential properties can still claim long-term capital gains (LTCG) exemption under Section 54 of the Income Tax Act, if the sale proceeds are reinvested in a single residential property, provided all other conditions are met. Experts say this interpretation could ease tax pressures for middle-class families and joint property owners navigating complex real estate transactions. 'Judgment based on liberal interpretation' 'This judgement is based on a liberal interpretation of Section 54, thereby emphasising that denial of exemption merely on literal interpretation or pure technical grounds is not the intent of law,' said Riaz Thingna, partner, Grant Thornton Bharat. He added that the ITAT allowed the exemption even though two houses—owned separately by a husband and wife—were sold and proceeds were jointly reinvested in one new home. The ruling sets a precedent that as long as each co-owner claims LTCG exemption only on their respective share and avoids double benefit, the exemption under Section 54 cannot be denied. Multiple sales, one house still valid According to Dipesh Jain, partner, Economic Laws Practice, 'There is no restriction under Section 54 if long-term capital gains from multiple house properties are invested in one residential property, as long as the conditions of the section are fulfilled.' He further clarified that although Section 54 limits the investment to only one (or in some cases, two) residential houses, it does not restrict gains arising from the sale of multiple properties. While both experts agree that the ruling brings flexibility, they caution that risks at the initial assessment stage still exist. 'The decision offers greater clarity, but taxpayers must be cautious. If multiple properties are sold by the same person and the total gain is reinvested into a single house, exemption may be denied,' warned Thingna, citing the specific wording of the law that refers to 'a residential house'. Jain noted that litigation risks cannot be ruled out at the assessing officer level, even though higher appellate forums may offer relief. Precautions for claiming exemption Taxpayers planning to use this benefit should take the following precautions suggested by both of the experts: · Maintain clear documentation proving ownership and transaction details. · Ensure compliance with all conditions of Section 54, especially investment limits. · Avoid double claiming of exemption in case of joint ownership. · Keep judicial precedents handy to support claims if challenged by tax authorities. 'The taxpayer must show that joint owners are not taking double benefit and have claimed exemption only on their respective share,' emphasised Thingna. The ITAT's interpretation aligns with the intent of Section 54 to promote reinvestment in housing, but taxpayers must tread carefully and consult professionals to ensure compliance and avoid potential disputes.
Mint
19-05-2025
- Business
- Mint
Do NRIs have to pay tax on mutual fund gains in India?
India's tax laws under the Income Tax Act, 1961, define how mutual fund investments by non-resident Indians (NRIs) are taxed. For equity-oriented mutual funds, NRIs are subject to a 20% tax on short-term capital gains (STCG) and a 12.5% tax on long-term capital gains (LTCG). The taxation is different for debt mutual funds purchased on or after 1 April 2024, which are always considered short-term in nature and taxed according to the investor's applicable income slab rate. For other categories of mutual funds, STCG is taxed at the investor's slab rate, while LTCG is taxed at a flat rate of 12.5%. If debt mutual funds were acquired before the 1 April 2024 threshold, the gains are taxed under the same STCG and LTCG framework as other mutual funds. Given these high tax rates, NRIs may hesitate before investing in Indian mutual funds. However, tax liability should not be viewed in isolation. India has signed Double Taxation Avoidance Agreements (DTAA) with several countries, which in some cases allow capital gains to be taxed exclusively in the investor's country of residence. Under certain DTAAs, the 'residual clause" becomes critical. This clause provides exclusive taxing rights to the country where the seller resides—offering an exemption from capital gains tax in India, so long as the asset is not classified as immovable property or shares of an Indian company. Also read: For some NRIs, capital gains from Indian mutual funds are tax-free Case study: Singapore resident gets relief A recent ruling by the Mumbai Income Tax Appellate Tribunal (ITAT) has clarified the application of this exemption. In the case, the assessee was a non-resident Indian who qualified as a tax resident of Singapore. He had earned short-term capital gains by selling equity mutual fund units and claimed that these gains were exempt from tax in India under Article 13 of the India–Singapore DTAA. However, the assessing officer disagreed and attempted to tax the gains on the grounds that the mutual fund units derived value from Indian assets. The Mumbai Tribunal ruled in favour of the assessee, citing precedent in a similar case. It held that capital gains from the transfer of mutual fund units should not be covered under Article 13(4), which deals with shares of an Indian company, but rather under Article 13(5), which pertains to 'property other than shares." This distinction is crucial, as it effectively exempts such capital gains from taxation in India under the India–Singapore DTAA. Consequently, the assessee was entitled to tax relief. This ruling has come as a surprise to many in the investor community. While this exemption has always existed under certain tax treaties, many eligible NRIs are unaware of it and therefore miss the opportunity to claim the benefit. Also read: Decoding dual taxation: What NRIs need to know for better tax efficiency Mutual fund houses typically deduct tax at source (TDS) on capital gains from NRIs regardless of treaty applicability, and this deduction is based on standard NRI rates. If excess tax is deducted, the investor must file a tax return in India to claim a refund. If a return is not filed, no refund will be issued. To avail the exemption, an NRI must meet certain criteria. They must be a tax resident of a country that has a DTAA with India featuring the residual clause—such as Singapore, the UAE, Mauritius, the Netherlands, Spain, and Portugal—and the country of residence must not levy tax on the capital gains in question. The tax relief applies only to capital gains from assets other than Indian immovable property or shares. Investing via portfolio manager? In that case, both the interpretation and taxation would have been different. The gains from the sale of units by the portfolio manager, purchased on behalf of the investor, may be subject to tax in such a scenario. It is therefore essential for NRIs to keep detailed records to prove direct ownership and investment activity. Bank statements should clearly show that the funds were directly invested in mutual fund units and that the sale proceeds were credited directly to the assessee's account by the fund house. Also read: ITR filing: Why you shouldn't rush to file taxes as soon as the portal opens NRIs must also ensure that they declare their NRI status to mutual fund houses at the time of investment, understand the applicable tax structures, and take currency fluctuations into account when evaluating investment returns. This ruling serves as a reminder that the tax benefits under DTAA agreements are not automatically granted—they must be properly claimed and supported with appropriate documentation. Though the exemption has been part of the legal framework, this ruling helps clarify its applicability and confirms that NRIs from select countries can rightfully claim relief. However, the exemption holds only if the country of residence does not impose its own tax on capital gains. With proper planning and awareness, NRIs can legitimately reduce their tax liability on mutual fund investments in India. Also read: Storm in a teacup: Should Indian workers in the UK be exempt from payroll tax? Jigar Mansatta is a chartered accountant based in Jamnagar.
Time of India
14-05-2025
- Business
- Time of India
Benami Assets Worth Over 452 Crore Attached By Taxmen In Nagpur Region
1 2 Nagpur: Taxmen have attached benami assets worth more than Rs 452 crore in Nagpur region related to 30 cases until the financial year ending March 2025. The action comes under Benami Transactions (Prohibition) Amendment Act 2016 for which a special section has been set up by the department. The jurisdiction of Nagpur region covers Vidarbha & majority of the amount attached is cash, with a small portion gold and a single car which was attached recently. "A sizeable amount of the cash was found to be parked in multi-state cooperative societies," said sources. The accounts are opened in the name of unsuspecting persons having little means to get such amounts in their accounts. Recently, a daily wager living in Multai, Madhya Pradesh, made headlines after he was served a tax notice of Rs 314 crore. The tax liability was assessed based on an amount running into hundreds of crores found parked in his account in a cooperative society in Nagpur. The cooperative that operated from a pigeonhole sized office has shut down properties are the assets whose ownership cannot be proven by the holders and are held in others' name to avoid detection. Attachment of the assets is the first step. The attachment has to be later adjudicated by a judicial authority. Once adjudicated, the amount is termed to be confiscated and credited to the national exchequer, explained a of the Rs 452 crore attached by the department in Nagpur region, over Rs 5.38 crore was finally confiscated during the last fiscal. The process continues for the rest of the amount, said sources. Attachment and confiscation is a continuous process. In 2023-24 FY, assets worth Rs 50 crore were confiscated and deposited into govt exchequer as Rs 6 crore of benami properties were the ITAT upheld move to declare over Rs 45cr of deposits parked in over 500 accounts in Buldhana Urban Cooperative Society as benami.
