Chartered Accountant

1. Income tax Act-1961 has incorporated numerous penalty and prosecution provision for the defaulters & evaders. Penal provisions are there:
   - for concealment of income
   - for furnishing inaccurate particular of income
   - for failure to maintain the books of account wherever applicable
   - for failure to furnish return of income
   - for acceptance or repayment of loans/ deposits of Rs. 20,000/- or more in cash
   - for failure to answer any questions put to any person by an income tax authority
   - for failure to comply with the summons issued by income tax authorities
   - for failure to sign any statements required by income tax authorities
   - for willful attempt to evade tax/interest etc.
   Above is just an illustrative list of penal clauses. For each and every failure/ default/ evasion, there is a penalty, fine or even prosecution provision. As a true well wisher, you should advise your friend not to venture in any sort of bogus claim or malpractices, whether by claiming LIC / PFF deduction on the basis of bogus receipts or any such other mode. Taxpayer should note that the tax always costs less than the penalty, fine and prosecution.
2. The department is tracking the information of non filers very vigorously and vigilantly. The citizens with taxable income should ensure to file the return without any ignorance. The non filers could be subject to hefty penalty, fine & prosecution. In normal course, returns for the previous year are not scrutinized on the basis of the current year returns. But, with the increased usage of technology by the department, the probability of getting trapped is enormously high. It is advisable for your friend to file the return for the current year even though his income is less than the basic exemption limit because department is issuing the notices to the non filers having TDS to their credit but have not filed their income tax return even for claiming refund of their own (TDS) money. It is advisable to file the return voluntarily and claim the TDS refund rather than waiting & complying the subsequent notices of the department.
   Non filer who hasn’t filed the return of earlier years may take the benefit of “Income Declaration Scheme-2016” as proposed in the recent union budget-2016. By this scheme, non filers and persons with unaccounted income/investment have been bestowed with an opportunity to declare their untaxed income by paying 45% of the undisclosed income as tax, penalty & krishi vikas cess. The scheme is proposed to commence from 1^st June 2016 & would be operational for a short span of time. I would cover the details of the schemes after it gets the approval of the parliament.
3. Your friend can claim deduction by paying rent to his father. There is no bar in paying the rent to the father and claiming deduction u/s 10(13A) towards HRA.

1. An Individual/HUF earning Long Term Capital Gain (LTCG) from sale of house property can save tax by claiming an exemption u/s 54. For exemption, taxpayer would be required to invest the amount of LTCG for purchase or construction of the house property within a prescribed time period. The prescribed time periods are as under:
   a] For purchase- One year before or two years from the date of sale.
   b] For Constructions-Three years from the date of sale.
2. Cost Inflation Index (CII) for the relevant FY 2006-07 & 2015-16 are “519” & “1081” respectively. Your indexed cost of acquisition would be Rs. 13.64 Lacs and LTCG would be Rs. 15.96 Lacs. The amount of Rs. 10 Lacs or Rs. 5 Lacs directly applied towards loan repayment would not at all be relevant for working out the amount of LTCG. To save tax, you can invest the amount of Rs. 15.96 Lacs in another house property within a prescribed time frame.
3. You intend to purchase the house property for Rs. 35 Lacs. You can purchase it joint-ownership with your son. You can do so in around 50:50 ratio whereby you could invest your LTCG as your share in the house property and your son could avail housing loan against his share in the house property. As a result of this, (a) you could save tax on LTCG and (b) your son would be able to get tax benefit available against housing loan u/s 24(b) towards interest & u/s 80C towards principal repayment of housing loan.