Your questions: Income tax – A professional can withdraw from the new tax regime, but can no longer enter it

By Chirag Nangia

Can a professional (individual entrepreneur and self-employed person) who opted for the new tax regime during the previous financial year switch to the old tax regime this year when filing the tax return? And if I do, can I change again in the future?
—Aditi Gupta

Yes, a professional can opt out of the new scheme this year, however, they will never be able to enroll in it again. This was established under Section 115BAC(5) of the Income Tax Act. You must complete Form 10-IE to opt out of the new tax regime.

If I own a house in my name and another as a co-owner and my total income is less than Rs 50 lakh, which ITR form should be used to file returns in the financial year 2022-23.
—R. Srinivasa Rao

If you have income from only one of these properties, you can file ITR-1, otherwise ITR-2.

Also Read: ITR 2022: What Happens When You Don’t Respond to a Defective Section 139(9) Tax Return Notice

I am a retired resident with only LTCG on sale of stocks/mutual funds (covered by Section 112A) and no other income. Can I claim both the LTCG exemption limit of Rs 1 lakh and the basic exemption limit of Rs 2.5 lakh for calculating tax liability?
—Rajnish Jain

Yes, you can claim both as the Rs 1 lakh Long Term Capital Gains (LTCG) exemption exceeds the basic exemption limit.

I am salaried. If I realize LTCG by way of sale of shares, the amount above Rs 1 lakh is taxable. Now, if we have a home loan, can the current year’s LTCG by way of stock sale be considered exempt from home loan principal repayment? Should this be considered under Article 54?

The LTCG used to repay the principal amount of the home loan may be deemed to meet the criteria set out under Section 54F of the Income Tax Act 1961. However, the loan must have been taken out within the year preceding the sale of the shares.

If my profits from the sale of shares exceed the basic exemption limit of Rs 2.5 lakh, will I have to pay both capital gains tax and income tax?
— Vipul Arora

Capital gains tax is part of income tax. All Long Term Capital Gains (LTCG) on the transfer of listed shares are taxed at 10%, if such gains exceed Rs 1 lakh in a financial year and Securities Transaction Tax (STT) has been duly paid. Other LTCGs are taxed at 20%. Short-term capital gains (STCG) are taxable at applicable slab rates. The rate is 15% if the STCG results from the sale of listed shares on which the STT has been paid. A resident individual can adjust the basic exemption ceiling in relation to the LTCG/STCG, after making adjustments to other income. In order to fulfill your tax obligation, you will need to complete the tax declaration form. You can pay the tax by making payment through an approved bank or over the internet using the electronic tax payment facility.

The screenwriter is the director, Nangia Andersen India. Send your questions to [email protected]

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