Many of the taxpayers have got a notice from income tax department as their systems are unable to process the tax returns correctly. Due to this it has increased the tax liabilities on capital gains and also denied the deduction of TDS in the income tax returns.
As per the sources, senior accountants have notified about discrepancies to Pramod Chandra Mody, chairman of Central Board of Direct Taxes (CBDT), regarding the errors at the department’s Central Processing Zone (CPC) in Bengaluru.
After many years, Indian taxpayers will get taxed on their long-term capital gains at 10% if such gains are more than Rs 1 lakh. In grandfathering the tax rule, the government had pegged the price of a stock on February 1, 2018, or the actual purchase price, whichever is higher, as the cost in computing the gain. For instance, if a stock is purchased at Rs 500 in 2016 and sold at Rs 900 in March 2019, while the share closed at Rs 800 on February 1, 2018, the gain is Rs 100, not Rs 400.
The income department’s software system is failing to calculatethe long-term capital gains specially when it is about multiple stocks.
Another error in LTCG computation relates to shares acquired between February 1, 2018, and March 31, 2018.
“The I-T return form and the computer system processing the returns are not compatible with the provisions of the law as well as the legal positions on some of the matters. Not only is this causing hardship, but the objective to minimise litigation may also suffer a setback,” said senior chartered accountant Dilip Lakhani.