The Hindu Business Line : Claiming excess TDS from Govt account

Our company has deducted applicable income-tax on a monthly basis from salaries and remitted the same into the Government Account and also filed quarterly returns of TDS. One of our employees has now submitted certain documents entitling him to deductions on a home loan and is requesting that the tax deducted and remitted in the earlier months be refunded.

Is it possible to do what the employee wants, particularly after filing the quarterly returns of TDS? – P. Narender

Whether or not a quarterly return of TDS has been furnished, the question of refunding the tax already deducted does not arise.

You may note that under section 200 of the Income Tax Act, there is a mandate on every person deducting tax in accordance with Chapter XVII B to remit the same into the Government Account. Failure to do so could invite consequences under sections 201(1), 201(1A) as also under section 271C.

The employee can file a return and claim refund of tax deducted at source if it is in excess.

I lived in the US from 1980 to 1998. I returned to India in July 1998. I have invested my earnings in the US in stocks there. I receive income by way of dividends and capital gains from these investments in stocks. Am I liable to pay tax in India in respect of dividends and capital gains earned in the US which are out of investments made from income earned when I was a non-resident between 1980 and 1998? – Kumar Swamy

As you have been in India since 1998 you would be a resident and ordinarily resident in India in accordance with section 6 of the Income-Tax Act. This would mean that your entire world income would be taxable in India. The dividends and capital gains would also be taxable in India.

You may note that though dividends and long-term capital gains are exempt in certain cases, in your case it would be taxable as the dividends are from a foreign company. Similarly, the capital gains earned from stocks in the US will not enjoy exemption even if the gain is long-term.

Under section 10(38) of the Act, the exemption would be available only if the transaction of sale is through a recognised stock exchange where securities transaction tax is paid at the time of sale.

If the dividends and capital gains are also chargeable to tax in the US, you may claim credit for the tax paid in the US while making payment of tax in India.

Such credit is available under Article 25 of the Double Taxation Avoidance Agreement between India and USA and the credit that would be available would be lower of the tax payable on such doubly taxed income in India or in the US.

You may also note that under Article 25 of the Double Taxation Avoidance Agreement between India and USA, credit is allowed on the tax paid in the country of source by the country of residence determined in accordance with Article 4 of the Double Taxation Avoidance Agreement between India and USA.

From the facts given by you, it appears that you would be a resident of India in accordance with the Double Taxation Avoidance Agreement given that you have been staying in India permanently since 1998.

I own a flat registered in my wife’s name. I have taken a loan jointly along with my wife. I pay the EMI to the bank out of my salary income. Can I avail of the tax benefits for the principal repayment and the interest payment on the EMI? – Hemant Singh

The first aspect that will have to be considered will be as to who is the real owner of the flat.

If your wife is the real owner of the property, you will not be able to claim the benefits under the Act. On the other hand, if you are the real owner of the property though the property is registered in the name of your wife, you will be able to claim the tax benefits.

As ar as the interest is concerned which is allowed as a deduction under section 24 in computing income from house property, the Supreme Court has held that such income or loss has to be computed in the hands of the real owner of the property though the property may be registered in the name of another.

As far as the principal repayment is concerned, the same decision can be taken advantage of and deduction can be claimed by you under section 80C if you are the real owner of the property.

I obtained a Permanent Account Number last year. I was then working and had a salary income. I have since left the employment and do not have any income in the current year. The money earned by me by way of salary was used to make investment in shares. I have not sold any of these shares. Do I have to file a return of income for the current year? – Rashmi

A return has to be filed under section 139(1) if your income before allowing deductions under sections 80C to 80U exceeds the maximum amount not chargeable to tax. You have stated that you do not have any income chargeable to tax. Therefore, there would be no requirement for you to file a return of income under section 139(1).

The mere fact that you have applied for and obtained a Permanent Account Number under section 139A would not per se require that a return be filed by you.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002)