Capital Gains Division Splitting: Dividing Profits from Sales According to Each Sale Date in FY25 Tax Returns
Hey there! The income tax department has spiced things up in the world of tax returns, introducing changes for Assessment Year (AY) 2025-26. If you're dealing with capital gains, buckle up, because there are new rules to follow!
Long-Term Capital Gains: A New Twist
Taxpayers, get ready to split your long-term capital gains (LTCG) based on the date of asset sale — before or after July 23, 2024. Why, you ask? Well, that's due to the raunchy mid-year tax rate changes and indexation rules!
For sell- offs before July 23, 2024, LTCG tax will hit 10% on gains above ₹1 lakh per financial year. But after the big date, prepare for a 12.5% tax kick on gains above ₹1.25 lakh. If you're selling short-term, remember that short-term capital gains (STCG) will be taxed at 15% before July 23, 2024, while it'll be a smackin' 20% after that!
Capital Gains from Immovable Property: Your Choice
For immovable property acquired before July 23, 2024, you can either enjoy a 12.5% tax rate without indexation or choose the good ol' 20% with indexation. Be aware, the tax computation for both periods will differ, so keep your reporting straight!
Simplified Reporting for Small Fry
Hooray! ITR-1, a.k.a. Sahaj, now embraces LTCG under ₹1.25 lakh from listed equity shares or equity-oriented mutual funds. Previously, these little fishies had to file the detailed ITR-2. Just remember, if your LTCG or STCG exceeds ₹1.25 lakh, you'll still need ITR-2 or ITR-3 if applicable.
Keeping Records Straight
Understand that the transfer date is crucial for accurate reporting, so no mistakes allowed, bub! Messing up the transfer date could lead to notices from the tax department and incorrect tax calculations. Instead, maintain meticulous records for each asset sale and double-check your ITR schedules before submission.
ITR Utility: Your Savior
The ITR utility, your new bestie, will auto-calculate your tax payable once you input all the sweet details. But remember, incorrect data could lead to interest and penalties. So, keep your documentation in order!
Updated Schema for Transparent ITR
The new ITR forms will require reporting of the specific section under which TDS has been deducted in Schedule TDS. This adds transparency during verification and speeds up processing by eliminating mismatch notices. Each section code corresponds to a specific nature of payment under the Income Tax Act, so match the TDS entries with your ol' pal, Form 26AS, to ensure smooth credit claims.
Avoid any hiccups during ITR filing by understanding the key changes in capital gains reporting for FY25. Remember, an accurate and timely ITR submission is the key to avoid penalties, notices, and other tax-related headaches!
Financing your personal-finance next year will require keen attention due to adjustments in the capital gains reporting for the Assessment Year 2025-26, especially with the changes in long-term and short-term capital gains tax rates. In the market, it's crucial to reconsider your strategies when selling assets, as the tax regime on capital gains from both listed shares and immovable properties has been revised.
To be more efficient in your personal-finance management, you may find it helpful to leverage digital tools, such as the ITR utility, that aid in calculating your tax payable and comparing your form entries with Form 26AS for transparency. Stay updated on the new reporting schema to ensure smooth credit claims and avoid penalties and notices.
