Interest on capital gain
This query is : Resolved
10 August 2012
IF THE TOTAL ADVANCE TAX & TDS PAID IS < THAN THE TOTAL TAX(INCLUDING TAX ON CAPITAL GAIN) THEN SHALL I REDUCE THE TOTAL TAX BY TAX ON CAPITAL GAIN FOR CALCULATION OF INTEREST U/S 234 C FO A.Y. 12-13?
CMA Nishad Patkar
(Expert)
11 August 2012
Dear Aditi,
As per the Defination of Advance Tax U/s 210, Every Income( including Capital Gain) is liable for payment of Advance Tax. And Interest U/s 234C is attracted to Non compliance of Advance Tax payment on respective due dates. Therefore you can not reduce the total tax by tax on Capital Gain. Further You also need to show CG income at the time of filing of return, so there no escapement from 234C.
As per the Defination of Advance Tax U/s 210, Every Income( including Capital Gain) is liable for payment of Advance Tax. And Interest U/s 234C is attracted to Non compliance of Advance Tax payment on respective due dates. Therefore you can not reduce the total tax by tax on Capital Gain. Further You also need to show CG income at the time of filing of return, so there no escapement from 234C.
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11 August 2012
SEC 234C(1)(b)(ii) PROVISO SAYS THAT
"PROVIDED THAT NOTHING CONTAINED IN THIS SUBSECTION SHALL APPLY TO ANY SHORTFALL IN THE PAYMENT OF THE TAX DUE ON THE RETURNED INCOME WHERE SUCH SHORTFALL IS ON ACCOUNT OF UNDER- ESTIMATE OR FAILURE TO ESTIMATE-
(a)the amount of capital gain; or
(b) income of the nature referred in sub clause (ix)
and the assesse has paid the whole of the amount of tax payable in respect of income referred to in clause (a)or(b) , had such income been part of total income, as part of remaining installments by 31st march of F.Y..
IF CAPITAL GAIN AROSE AFTER PAYING FIRST 2 INSTALLMENTS OF ADVANCE TAX AND IN THE THIRD INSTALLMENT ASSESSEE HAS PAID THE TAX ACCORDING TO THE CAPITAL GAIN , IS HE LIABLE U/S 234C for the shortfall in advance tax for first & second installments?
"PROVIDED THAT NOTHING CONTAINED IN THIS SUBSECTION SHALL APPLY TO ANY SHORTFALL IN THE PAYMENT OF THE TAX DUE ON THE RETURNED INCOME WHERE SUCH SHORTFALL IS ON ACCOUNT OF UNDER- ESTIMATE OR FAILURE TO ESTIMATE-
(a)the amount of capital gain; or
(b) income of the nature referred in sub clause (ix)
and the assesse has paid the whole of the amount of tax payable in respect of income referred to in clause (a)or(b) , had such income been part of total income, as part of remaining installments by 31st march of F.Y..
IF CAPITAL GAIN AROSE AFTER PAYING FIRST 2 INSTALLMENTS OF ADVANCE TAX AND IN THE THIRD INSTALLMENT ASSESSEE HAS PAID THE TAX ACCORDING TO THE CAPITAL GAIN , IS HE LIABLE U/S 234C for the shortfall in advance tax for first & second installments?
CA VISHNU GAVKARE
(Expert)
11 August 2012
Yes if it is paid after capital gain has arose then you need not to pay interest on such short payment.
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