Payment of tax on un-utilized amount of capital gains after claiming exemption
I have an issue that I need help with regarding the payment of capital gains tax arising out of sale of a house property of my father.
1) A residential property was sold by my father in Aug 2017 for Rs.46 lakhs. The sale resulted in long term capital gains for my father of Rs.14,44,800 (after considering the cost of acquisition as per indexation as Rs.31,55,200).
2) An account was opened under the CGAS (Captal Gains Account Scheme) in May 2018 and my father deposited an amount of Rs.24 lakhs into this CGAS account (even though the actual CG works out to Rs.14.44 lakhs).
3) We had filed ITR-2 for AY 2018-19, where these details were declared and a deduction on the capital gains was claimed under Section 54F.
4) However, subsequently, my father did not find any new house to purchase nor construct a new house. Given that no new property was purchased, it was assumed that the deadline for paying the tax on the capital gains (for which we claimed exemption) was Aug 2019 i.e., 2 years from the sale of the property. Hence on 7th August 2019, an Advance Tax of Rs.3,00,520 was paid by my father towards the tax on the capital gains of Rs.14.44 lakhs.
5) Now when filing the returns for AY20-21 (FY19-20), we need to be able to declare that the deduction claimed on the capital gains u/s 54F in AY18-19 is no longer valid and that we paid the applicable taxes that became payable owing to the non-purchase of another property or construction of a new property.
6) In this year's ITR-2 preparation software, in the sheet for Capital Gains, there is a section B(10) which is for "Amount deemed to be long-term capital gains". In that section, sub-section (a) asks for the details of the unutilized capital gains that had been deposited into capital gains account in a previous year. Now, here is the problem: In the table, logically, we should have been able to select "2017-18" in the column "Previous Year in which Asset transferred" and "54F" for the column "Section under which deduction claimed in that year". In the Excel preparation software, it shows "54", "54F", "54GB" and "54B" as the options for the section. But if the year selected is "2017-18", then it does not allow us to select any selection other than "54B". The remaining 3 options (54, 54F, 54GB) are only allowed to be selected if the year is "2016-17".
My questions:
1. Did we pay the tax erroneously one year earlier? If so, what is the remediation possible?
2. I later realized that the section under which we claimed deduction in AY18-19 i.e., 54F seems to be incorrect. Looks like we should have claimed the exemption under section 54 and not section 54F. Is this an issue? That ITR2 was already processed. What can be done now?
Asked 3 years ago in Capital Gains Tax
Thank you very much for your response Mr.Malpani. Seems like we have no choice but to claim refund and pay advance tax again in FY20-21.
With regard to the issue with Section 54F, I understand, practically it should not matter if we declare the same section (54F) while offering the deemed capital gains while filing the return for AY21-22. However, if we don't want to take a chance, then the right thing to do is to file for condonation of delay and once that is approved, file the revised ITR2 for AY2018-19.
1. Can this condonation of delay be filed online on the eFiling website directly by my father? Or does it need to be done offline through a CA?
2. How long does it generally take to get the approval for condonation of delay?
Separately, irrespective of whether we decide to revise the ITR for AY18-19, we will need to pay the advance tax in this FY right (anyway, while paying the advance tax, there is no provision to declare the section under which exemption was sought)?
Asked 3 years ago
