Tax, Tax Deduction, Tax Liability
Tax, Tax Deduction, Tax Liability

Tax Deducted Is Lower Than Your Net Tax Liability? Here’s What To Do

Tax deducted from your income may not always equal your ultimate tax liability. The amount so deposited has to be used for the purchase or construction within the mentioned period. The taxable value of the perquisite, i.e. 10% per annum of the cost of furniture, would be included in your salary.
Q

I am a consultant and have received fees after TDS. Do I still need to pay advance tax? 

A

The advance tax is calculated on your total income based on the applicable tax whereas tax is deducted at a flat rate which may not necessarily be the same. While computing advance tax liability the amount of deductions available are also taken into account whereas while deducting tax these are not considered. So tax deducted from your income may not always equal your ultimate tax liability. So in case the tax deducted is lower than your net tax liability you have to discharge the balance tax liability by way of advance tax. Though the advance tax is to be paid in four installments on 15th June, 15th September, 15th December and 15th March but since you have missed three installments, you can still discharge your advance tax liability by paying the full difference between net tax liability and tax already deducted by 15h March together with interest on the missed installments.   

Q

I have sold my residential house. I earned a long-term capital gain of Rs. 55 lakhs in Jan 2024. I wish to claim exemption from capital gain tax under section 54. What is the time limit to purchase another residential house? 

A

To claim long term capital gains exemption under Section 54, you have to invest the indexed long-term capital gains for the purchase or construction of another residential house. You have to purchase the residential house within two years from the date of sale of the existing house. If you wish to construct a house by yourself or go for an under-construction property, then the limit is three years from the date of transfer. Please note if you are not able to utilize the amount of capital gain for the purchase or construction of the house before the due date of furnishing of the return of income, then you can deposit the unutilized portion of capital gains in an account under the Capital Gains Deposit Accounts Scheme. The amount so deposited has to be used for the purchase or construction within the mentioned period.

Q

I am an employee of a pharmaceutical firm. The firm has given me some furniture for use. Do I have to pay tax for using them?

A

Under the tax laws using an employer’s movable assets by the employee or his family at their residence is treated as a taxable perquisite in the hands of the employee. The value of the perquisite is calculated at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. Thus, the taxable value of the perquisite, i.e. 10% per annum of the cost of furniture, would be included in your salary. In case the movable asset is not owned by the employer but is taken on lease, the rental paid is to be treated as taxable perquisite.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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