Your Queries: Income Tax – Capital gains on sale of flat to be shown in ITR in year of sale

By Chirag Nangia

I bought a flat in December 2020 using the capital gain accrued from my earlier sale of a property. How can it be shown in my ITR?
—P K Ramesh
To avail the exemption under Section 54, capital gains on sale of property have to be re-invested in new residential property within 2 or 3 years. However, since the time frame is long and capital gains are to be reported in the year of sale, one has to park the funds in the Capital Gain Account Scheme and claim exemption.

So, the particulars of sale of property and subsequent investment in new house property (cost of new property, date of purchase or construction/ amount of unutilised capital gain deposited in the Capital Gain Account Scheme) have to be disclosed in the Income Tax Return of the year in which the capital gain arises (i.e. the year of sale). No disclosure is required on subsequent purchase
of property.

VRS, PPF and gratuity received on retirement are not reflected in form 16 A/B. How do I show these in ITR and get exemption?
—G Pradhan
In the hands of government employees, gratuity and PF receipts on retirement are exempt from tax. In the hands of non-government employees, gratuity is exempt subject to the limits prescribed in the I-T Act and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than five years.

Even if the amounts are not reflected in Form 16A, the same has to be disclosed in Income Tax Return. The details have to be furnished by selecting the appropriate category under “Exempt Income” tab under salary head of the relevant ITR Form. If disclosed as such, the ITR utility shall not include it in taxable income.

There is a difference in interest and TDS on FD received and shown in form 26 AS. Which figure should I take for filing my ITR?
—Arun Bansal
In case the income as reported in Form 26AS does not match the amount actually received, it is conservative to report higher of the two amounts to avoid any query by the tax department. Alternatively, in case the difference is substantial, you may contact the bank and have the particulars corrected.

The writer is director, Nangia Andersen India. Send your queries to [email protected]