“A part of my property was acquired by the Hyderabad Metro in January 2013. The remaining property was sold in March 2013. In July 2013, I have deposited LTCG in SBI. Even after two years, I have not been able to purchase a property of my choice. Kindly state what would be the tax liability. Will I have to pay LTCG tax with interest or pay tax along with the current years income?” — Kiran Kumar via email
The long term capital gain (LTCG) arising from the transfer of a capital asset will be exempt if the assessee, within a period of one year before or two years after the date of transfer or sale of capital asset, the assessee purchases a residential house or constructs one within three years after the date of transfer or sale of such asset. If the amount of net consideration is not appropriated or utilised for the acquisition of the new asset before the due date of furnishing the return of income, it should be deposited by the assessee in an account with any specified bank and utilised in accordance with the Capital Gains Accounts Scheme.
If the amount deposited was not utilised, the capital gain will be brought to tax in the year in, which the specified period expires and if only part of the deposit is utilised, the capital gain relatable to the unutilised deposit will be brought to tax in the year in which the specified period expires.
The specified period — three years in your case expires only during year ended March 2016, the capital gain relatable to the unutilised amount will be brought to tax in the year when the specified period expires at the end of FY 2015-16 and not FY 2014-15. The question of interest on tax arising of LTCG during the FY 2012-13 to FY 2015-16 does not arise.
“If an individual had a taxable income in one year, but not in the subsequent years, does he need to file returns every year? I heard that once PAN is allotted a person, he must file his returns even though he does not have a taxable income? Is it true?” — Premnath via Email
According to Section 139(1) of the Income Tax Act, 1961, every person has to file a return of income if his or her total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeds the maximum amount, which is not chargeable to income tax.
However, if the total income is below the threshold limit mentioned above, it is not necessary to file a return of income even if PAN is allotted to such person.
(Kamal Rathi is a Hyderabad-based CA and can be contacted at kamalrathi.ca@gmail.com)
