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Home/Questions/Page 27

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Ravigovind.ca
Ravigovind.caBeginner
Asked: December 16, 2021In: Finance

What are the implications of RBI guidelines on current account

RBI guidelines on current account
  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 22, 2022 at 12:28 pm
    This answer was edited.

    RBI issued guidelines for the opening of multiple operating accounts by borrowers, both current accounts, as well as cash credit (CC)/overdraft (OD), accounts to curb diversion of funds and fraud with banks. By these guidelines, banks will be having complete information of the banking exposure of thRead more

    RBI issued guidelines for the opening of multiple operating accounts by borrowers, both current accounts, as well as cash credit (CC)/overdraft (OD), accounts to curb diversion of funds and fraud with banks. By these guidelines, banks will be having complete information of the banking exposure of the clients and can easily access their potential and credit limit for further credit. It will not only strengthen their banking system but also will reduce the chances of NPA and bad loans. However, Now banks have to create such infrastructure to implement these guidelines. 

    These Guidelines are as under:

    1. Borrowers who have availed credit facilities:  no bank can open current accounts for customers who have availed of credit facilities from the banking system. All transactions should be routed through the CC/OD account.
    2. Borrowers who have not availed of CC/OD facility from any bank: if a bank has less than 10 % of the borrower’s credit exposure, then debits to the CC/OD account can only be for credit to the CC/OD account with a bank that has 10 % or more of the credit exposure. By this restriction on debits from smaller accounts, the RBI intends to check the diversion of funds and keep the banking activity within the key consortium lenders to the borrowers.
    3. Borrowers who have not availed of CC/OD facility from any bank: For these customers, banks may open current accounts if the banking exposure of this customer is less than Rs 50 crore. Here, current accounts of borrowers can only be opened/maintained by the escrow managing bank.

    For details guidelines, the following link can be referred to: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12137&Mode=0

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CA Vishnu Ram
CA Vishnu RamEnlightened
Asked: December 14, 2021In: Income Tax

How to link Aadhaar number at ITR portal in case of HUF ?

  1. Ramesh Sharma Enlightened
    Added an answer on December 14, 2021 at 12:59 pm

    In the case of HUF, the Aadhaar number of Karta shall be linked with the PAN card of HUF. In the case of other non-corporate organizations, Aadhaar number of the principal person of the organization shall be linked with the PAN card of the organization.

    In the case of HUF, the Aadhaar number of Karta shall be linked with the PAN card of HUF. In the case of other non-corporate organizations, Aadhaar number of the principal person of the organization shall be linked with the PAN card of the organization.

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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 9, 2021In: Income Tax

What is the deduction of investment made in NPS scheme?

  1. CA Vishnu Ram Enlightened
    Added an answer on March 18, 2025 at 11:47 am

    Investments in the NPS offer attractive tax benefits under the Income Tax Act through two key provisions: 1. Deduction Under Section 80CCD(1) Who Can Claim: All individual taxpayers (both salaried and self-employed). What It Offers: You can claim a deduction on your contribution to the NPS, which isRead more

    Investments in the NPS offer attractive tax benefits under the Income Tax Act through two key provisions:

    1. Deduction Under Section 80CCD(1)

    • Who Can Claim:
      • All individual taxpayers (both salaried and self-employed).
    • What It Offers:
      • You can claim a deduction on your contribution to the NPS, which is calculated as a percentage of your salary:
        • For salaried individuals: Up to 10% of salary.
        • For self-employed individuals: Up to 20% of their gross income.
    • Note:
      • This deduction is available in addition to the standard deduction under Section 80C (though some NPS contributions may already be included in the overall 80C limit in certain cases).

    2. Additional Deduction Under Section 80CCD(1B)

    • What It Offers:
      • An extra deduction of ₹50,000 is available exclusively for contributions to the NPS.
    • Key Point:
      • This additional deduction is over and above what you claim under Section 80CCD(1) or Section 80C.
      • It is available irrespective of your other investments and does not form part of the overall 80C limit.

    Summary Table

    Section Eligible Contributions Deduction Limit Notes
    80CCD(1) NPS contributions (for salaried or self-employed individuals) Up to 10% of salary (salaried) or 20% of gross income (self-employed) Available along with regular deductions, may form part of 80C limits in certain cases
    80CCD(1B) Additional NPS contributions Additional ₹50,000 deduction Over and above deductions under Section 80CCD(1) and 80C; not affected by other limits

    Key Takeaways

    • Investing in NPS can significantly reduce your taxable income.
    • You can enjoy a deduction based on your salary/income under Section 80CCD(1) plus an extra ₹50,000 benefit under Section 80CCD(1B).
    • Keep proper records of your NPS contributions and ensure that your investment is made through eligible channels to claim these deductions.

    What are the investment eligible for section 80 deductions under income tax act?

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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 9, 2021In: Income Tax

What are the investment eligible for section 80 deductions under income tax act?

  1. CA Vishnu Ram Enlightened
    Added an answer on March 18, 2025 at 11:49 am

    The Income Tax Act offers tax relief under several subsections of Section 80. Here’s a breakdown of the key investment options: Investment Option Description Relevant Section Life Insurance Premium Premiums paid on life insurance policies for self, spouse, and children. Section 80C Employee ProvidenRead more

    The Income Tax Act offers tax relief under several subsections of Section 80. Here’s a breakdown of the key investment options:

    Investment Option Description Relevant Section
    Life Insurance Premium Premiums paid on life insurance policies for self, spouse, and children. Section 80C
    Employee Provident Fund (EPF) Contributions made to your EPF account as part of your employer’s scheme. Section 80C
    Public Provident Fund (PPF) Deposits in the government-backed PPF scheme. Section 80C
    National Savings Certificate (NSC) Investment in NSCs issued by post offices. Section 80C
    Tax-Saving Fixed Deposits Fixed deposits with a lock-in period of 5 years offered by banks and financial institutions. Section 80C
    Equity Linked Savings Scheme (ELSS) Tax-saving mutual funds with a lock-in period of 3 years. Section 80C
    Principal Repayment on Home Loan The principal component of home loan repayments. Section 80C
    Tuition Fees for Children Payments made for the education of your children (for up to 2 children). Section 80C
    Sukanya Samriddhi Yojana Deposits made into the Sukanya Samriddhi Account for a girl child. Section 80C
    Tax-Saving Bonds (Infrastructure Bonds) Investments in bonds notified under Section 80CCF (with a cap of ₹20,000). Section 80CCF
    Pension Fund Contributions (Other than NPS) Premiums paid for certain pension funds are deductible. Section 80CCC
    National Pension System (NPS) Contributions toward NPS are eligible for a deduction under Section 80CCD. An additional deduction of ₹50,000 is available under Section 80CCD(1B) over and above the limit available under Section 80CCD(1). Section 80CCD(1) & 80CCD(1B)

    Key Points to Remember:

    • Section 80C is the most widely used deduction and covers a variety of investments up to an overall limit (currently ₹1,50,000).
    • Section 80CCF provides additional benefits for investments in notified infrastructure bonds (with a separate cap).
    • Section 80CCD offers benefits on contributions toward pension schemes, with an extra ₹50,000 available exclusively under Section 80CCD(1B).
    • Ensure that you have proper documentation (receipts, certificates, statements) for each of these investments when filing your Income Tax Return.
    • These deductions help in reducing your taxable income and can significantly lower your tax liability.
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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

Whether business losses and depreciation can be carry forward in case of amalgamation and merger under income tax act?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 2:51 pm

    When a company undergoes an amalgamation or merger, the ability to carry forward its business losses and unabsorbed depreciation is not automatic. Instead, these benefits can be preserved only if certain conditions—designed to ensure continuity—are met. Here’s a simple breakdown: Key Points: ContinuRead more

    When a company undergoes an amalgamation or merger, the ability to carry forward its business losses and unabsorbed depreciation is not automatic. Instead, these benefits can be preserved only if certain conditions—designed to ensure continuity—are met. Here’s a simple breakdown:

    Key Points:

    1. Continuity of Business and Shareholding:

      • Mandatory Conditions:
        For the losses and depreciation of the amalgamating or merging company to be carried forward by the resulting entity, there must be a continuity of business. This typically means that the merged entity continues the same business as that of the transferor.
      • Shareholding Criterion:
        A significant condition is that there must be a continuity in shareholding. In many cases, at least 50% of the loss-making company’s share capital (or voting power) should be preserved in the merged entity. If this “continuity of shareholding” condition is not met, the benefits of carry forward are disallowed.
    2. Applicable Provisions:

      • The general rules for carrying forward business losses and unabsorbed depreciation are set out in Section 72 of the Income Tax Act, 1961.
      • Specific restrictions in the context of amalgamations/mergers have been clarified through judicial decisions and CBDT notifications. These emphasize that without the requisite continuity conditions, the losses and depreciation cannot be transferred to the amalgamated or merged entity.
    3. Practical Implications:

      • If Conditions Are Met:
        The merged entity can set off these losses and unabsorbed depreciation against its future business income, thus reducing its taxable income.
      • If Conditions Are Not Met:
        The losses and depreciation of the transferor company will be lost, and the amalgamated entity cannot claim them.
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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

Can we carry forward the loss on sale of securities and share?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 2:56 pm

    Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions: 1. Classification of Capital Losses: Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 monthRead more

    Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions:

    1. Classification of Capital Losses:

    • Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 months of acquisition. Such losses can be set off against both short-term and long-term capital gains. If not fully adjusted in the same financial year, they can be carried forward for up to 8 assessment years.

    • Long-Term Capital Loss (LTCL): Arises when securities are sold after 12 months of holding. These losses can only be set off against long-term capital gains. Unadjusted LTCL can also be carried forward for up to 8 assessment years.

    2. Conditions for Carry Forward:

    • Timely Filing of Income Tax Return: To carry forward capital losses, it’s mandatory to file your income tax return within the due date specified under Section 139(1) of the Income Tax Act. Failure to do so disqualifies the taxpayer from carrying forward the losses.

    3. Set-Off Provisions:

    • Short-Term Capital Loss: Can be set off against both short-term and long-term capital gains.

    • Long-Term Capital Loss: Can only be set off against long-term capital gains.

    4. Carry Forward Duration:

    • Both STCL and LTCL can be carried forward for a maximum of 8 assessment years immediately succeeding the year in which the loss was incurred.
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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

For how many years losses can be carry forward under the income tax act?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 2:58 pm

    The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here's a breakdown: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (cannot be set off against other heads of income). Condition: The reRead more

    The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here’s a breakdown:

    1. Business Losses

    • Carried forward for: 8 assessment years
    • Set-off allowed against: Only business income (cannot be set off against other heads of income).
    • Condition: The return of income must be filed within the due date under Section 139(1).

    2. Speculation Losses (from intra-day trading or derivatives)

    • Carried forward for: 4 assessment years
    • Set-off allowed against: Only speculation profits.

    3. Capital Losses (from the sale of assets, securities, or shares)

    • Carried forward for: 8 assessment years
    • Set-off allowed against:
      • Short-Term Capital Loss (STCL): Can be set off against both short-term and long-term capital gains.
      • Long-Term Capital Loss (LTCL): Can be set off only against long-term capital gains.

    4. Losses from House Property

    • Carried forward for: 8 assessment years
    • Set-off allowed against: Income from house property in future years.

    5. Unabsorbed Depreciation

    • Carried forward for: Indefinite years
    • Set-off allowed against: Any head of income except salary.
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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

Which loss can be carry forward under income tax act?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 2:59 pm

    Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (not salary, capital gains, or house propRead more

    Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary:

    1. Business Losses

    • Carried forward for: 8 assessment years
    • Set-off allowed against: Only business income (not salary, capital gains, or house property income).
    • Condition: The income tax return must be filed on or before the due date under Section 139(1).

    2. Speculation Losses (from intra-day trading or derivatives)

    • Carried forward for: 4 assessment years
    • Set-off allowed against: Only speculation profits (not any other income).

    3. Capital Losses (from the sale of assets, shares, or securities)

    • Carried forward for: 8 assessment years
    • Set-off allowed against:
      • Short-Term Capital Loss (STCL): Can be adjusted against both short-term and long-term capital gains.
      • Long-Term Capital Loss (LTCL): Can be adjusted only against long-term capital gains.

    4. Losses from House Property

    • Carried forward for: 8 assessment years
    • Set-off allowed against: Income from house property.

    5. Loss from Owning and Maintaining Race Horses

    • Carried forward for: 4 assessment years
    • Set-off allowed against: Only income from race horses.

    6. Unabsorbed Depreciation

    • Carried forward for: Indefinite years
    • Set-off allowed against: Any income except salary.
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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

How to set off losses of one head from income of other heads under income tax act?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 3:00 pm

    The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps: 1. Intra-Head Adjustment (Same Head of Income) – Section 70 Losses under one source of income can be set off against income from another sourRead more

    The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps:

    1. Intra-Head Adjustment (Same Head of Income) – Section 70

    Losses under one source of income can be set off against income from another source under the same head of income.

    ✅ Examples:

    • Loss from business A can be set off against profit from business B.
    • Loss from one house property can be set off against income from another house property.
    • Short-term capital loss (STCL) can be set off against short-term or long-term capital gains.

    🚫 Exceptions:

    • Speculation loss can be set off only against speculation income.
    • Long-term capital loss (LTCL) can be set off only against long-term capital gains.
    • Loss from owning race horses can be set off only against income from race horses.

    2. Inter-Head Adjustment (Different Heads of Income) – Section 71

    If a loss remains after intra-head adjustment, it can be set off against income from another head in the same financial year.

    ✅ Examples:

    • Business loss can be set off against salary, house property, or capital gains.
    • House property loss can be set off against salary, business, or other income (up to ₹2 lakh per year).

    🚫 Restrictions:

    • Speculation losses cannot be set off against any other head of income.
    • Capital losses can only be set off against capital gains.
    • Loss from race horses cannot be set off against other incomes.
    • Business losses cannot be set off against salary income.

    3. Carry Forward of Losses (If Not Fully Adjusted)

    If a loss cannot be fully set off in the current year, it can be carried forward for set periods and adjusted in future years as per income tax provisions.

    📌 Important Rules:
    ✅ The income tax return must be filed on time to carry forward losses.
    ✅ Losses can be set off only as per rules defined in the Act.

    This helps taxpayers optimize tax liability and minimize tax burden legally.

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Ramesh Sharma
Ramesh SharmaEnlightened
Asked: December 7, 2021In: Income Tax

What is set off of losses under same head of Income under income tax act?

  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    Added an answer on March 21, 2025 at 3:01 pm

    The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income. Key Rules for Set-Off of Losses Under the Same Head: ✅ Business Loss: Loss from one businesRead more

    The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income.


    Key Rules for Set-Off of Losses Under the Same Head:

    ✅ Business Loss: Loss from one business can be set off against income from another business.
    ✅ House Property Loss: Loss from one property can be set off against income from another property.
    ✅ Capital Gains:

    • Short-term capital loss (STCL) can be set off against short-term or long-term capital gains.
    • Long-term capital loss (LTCL) can be set off only against long-term capital gains.

    🚫 Exceptions:

    • Speculation loss can be set off only against speculation income.
    • Loss from owning race horses can be set off only against income from race horses.

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