Your Taxes

My brother is 80 years old and had been filing his returns. Of late, he is showing signs of onset of Alzheimer’s. How can he file his return now? He stays with his wife who is financially illiterate.

VN Menon

A resident individual who attains the age of 80 years at any time during a financial year is categorised a ‘very senior citizen’ according to the provisions of the Income Tax Act. This category of taxpayers currently enjoys some additional tax benefits compared with other individual taxpayers.

The government mandates filing of I-T returns for all individuals earning in excess of the prescribed threshold — there is no exemption for senior citizens (resident individuals 60 years or above) or very senior citizens. However, while the prescribed threshold for any individual is ₹2.5 lakh, for senior citizens, it is ₹3 lakh, and for very senior citizens, it is ₹5 lakh. Apart from this, the I-T Act makes no difference between a senior citizen and a very senior citizen.

As per the provisions of Section 140 of the I-T Act, where it is not possible for the individual to verify his/her tax return, he/she may authorise any person to do so on their behalf by executing a valid power of attorney. The online e-filing portal also has the functionality for individuals to add a person as their representative for a period as may be specified by the individual to file the tax returns.

The Tax Return Preparer (TRP) Scheme is designed to assist small and medium taxpayers in preparation of their return of income and other I-T-related issues. Under the TRP Scheme, the Centre authorises tax professionals called Tax Return Preparers.

So, if the total income of your brother doesn’t exceed ₹5 lakh, he needn’t file his return. If not, he may appoint a representative on his behalf, or seek the help of a TRP or any other professional.

I have made short-term capital gain from redemption of units of equity-oriented mutual funds and STPs (systematic transfer plans) of liquid funds. Can the gain be set off against short-term loss from switching units from balanced schemes to hybrid and equity schemes? If yes, how does one reflect this in the period/quarter in which the gain was accrued?

VN Menon

Switching out of an MF through an STP is considered a sale, and any capital gain/loss airing on account of such switch is taxable.

Your understanding is correct that any gain (short- or long-term) can be set off against the short-term capital loss arising on account of switching units from balanced schemes to hybrid and equity schemes.

We presume your query in relation to the reporting of the same is in the context of payment of advance tax. The quarterly instalments of advance tax are to be paid by June 15, September 15, December 15 and March 15. Advance tax is liable to be paid on income, including capital gain. Accordingly, while calculating advance tax, it is required that the date of accrual of such gain/loss is considered, and the estimated taxes are deposited by the due date.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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