Capital Gains or Tax Relief under Section 89 Updated / Revised Income Tax Return Filing ( ITR-U )

Any profit or gain that arises from the sale of a 'capital asset' is a capital gain. This gain or profit is charged to tax in the year in which the transfer of the capital asset takes place.

No capital gains is applicable when an asset is inherited because there is no 'sale', only a transfer. However, if this asset is sold by the person who inherits it, capital gains tax will be applicable. The Income Tax Act has specifically exempted assets received as gifts by way of an inheritance or will.

• Here are some examples of capital assets: land, building, house property, vehicles, patents, trademarks, leasehold rights, machinery, jewellery.


• This includes rights in or in relation to an Indian company, including rights of management or control or any other right.The following are not considered capital assets:


• Any stocks or consumables or raw material held for the purpose of Business or Profession


• Personal goods such as clothes, furniture held for personal use.


• Agricultural land in India in a rural area
  *Note: for details read Here

• A capital asset held for not more than 36 months or less is a short-term capital asset. An asset that is held for more than 36 months is a long-term capital asset.


• For example, a house property held for more than 3 years is termed as a long-term capital asset, whereas equity funds are considered short-term when held for 12 months or less. Debt Funds are long-term assets when held for more than 36 months.


• It is important to find out the specific holding period applicable to your asset because it impacts how the capital gains will be calculated.


• Some assets are considered short-term capital assets when these are held for 12 months or less. This rule is applicable if the date of transfer is after 10th July 2014, irrespective of what the date of purchase is.The assets are:


• Equity or preference shares in a company listed on a recognized stock exchange in India


• Securities (like debentures, bonds, Govt securities etc) listed on a recognized stock exchange in India


• Units of UTI, whether quoted or not


• Units of equity oriented mutual fund, whether quoted or not


• Zero coupon bonds, whether quoted or not.


• When the above listed assets are held for a period of more than 12 months, they are considered long-term capital asset

• Tax on long-term capital gain: Long-term capital gain is taxable at 20% + surcharge and education cess.




• Tax on short-term capital gain when securities transaction tax is not applicable: If securities transaction tax is not applicable, short-term capital gain is added to your income tax return and the taxpayer is taxed according to his income tax slab.




• Note: Tax on short-term capital gain if securities transaction tax is applicable: If securities transaction tax is applicable, short-term capital gain is taxable at the rate of 15% +surcharge and education cess.

Tax is calculated on your total income earned or received during the year. If your total income includes any past dues paid in the current year, you may be worried about paying a higher tax on such arrears (usually tax rates have gone up over the years).

To save you from any additional burden of tax due to delay in receiving income, the tax laws allow a relief under section 89(1). If you have received any portion of your salary in arrears or in advance, or your have received family pension in arrears, you are allowed some tax relief under section 89(1) read alongwith Rule 21A. Find the details here

• Starting income tax returns for financial year 2014-15 (assessment year 2015-16), the income tax department has made it mandatory to file Form 10E if you want to claim relief under section 89(1). .


• Taxpayers who have claimed relief under section 89(1) but have not filed Form 10E have received an income tax notice from the tax department with the following lines ?


• The relief u/s 89 has not been allowed in your Expert'se, as the online form 10E has not been filed by you. The furnishing of Online form 10E is required as per sec.89 of the Income Tax Act. Find the details Here

Individuals need to file their return by 30th September of next year, i.e for income earned in Financial Year 2015-16, the return has to be filed by 30th September, 2016.

Income from House Property is possible in these Expert'ses ?

• Rental Income on a let out property


• Annual Value of a property which is ?deemed? to be let out for income tax purposes ( when you own more than one house property)


• Annual Value of the property which is self occupied, which is Nil


• Under section 24 of the Income Tax Act you are allowed to make certain deduction from the Net Annual Value of your House Property. Net Annual Value is Gross Annual Value less Municipal Taxes Paid. In case the property is let out, its rent received is your Gross Annual Value, whereas in case of a deemed to be let out property, a reasonable rent of a similar place is your Gross Annual Value. For a self occupied house property the Gross Annual Value is Nil. Read more about House property income and its taxation Here

When an asset is sold, the profit arising from such transaction is taxed as Capital Gain. Such gain can be long term or short term and the taxability differs accordingly. In General gain on sale of assets held for more than 36months are called Long Term Capital Gain(LTCG taxed at 20%)and when assets is held for lesser period then Short Term Capital Gain( taxed according to normal tax slab rates) arises. In case of shares and securities the period is 12 months in place of 36months.

Yes, return can be revised within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. Filing of revised return is not part of the plan. Plan buyer is required to provide full and accurate details to avoid the need for any rectification in the originally filed return.

Yes, a belated return can be filed before the end of the assessment year or before completion of the assessment year, whichever is earlier. For example, in case of income earned during FY 2019-20, the belated return can be filed up to 31st March 2021. ?

Yes, under the Income-tax Act legal proceedings can be initiated up to 4 to 6 years (depending upon case to Expert'se) prior to the current financial year.
However, in certain Expert'ses the proceedings can be initiated even after 6 years, hence, it is advised to preserve the copy of return for at least 6 years or maintain it as long as possible.

ITR return forms are attachment less forms and hence, you are not required to attach any document (like proof of investment, TDS certificates etc.) along with the ITR (whether filed manually or electronically).
However, these documents should be retained and produced before the tax authorities when demanded in situations like assessment, inquiry etc.

Audit & preparation of financial statements is not part of the plan.

Revised return filing on account of incorrect information provided by the assessee during the original return filing shall not form part of the plan.

Refund is applicable only if no Experthas been assigned on the Expert'se, for detailed policy please visit our terms of use