Hundreds of taxpayers received notice from the department due to a disturbance in the income tax department’s system. Tax returns are not being processed properly in the system. Due to this, many taxpayers are seeing more tax liability on capital gains, while many taxpayers have been refused to give TDS credit.
Apart from this, there have been many more disturbances. Senior accountants have drawn the attention of Pramod Chandra Modi, chairman of the Central Board of Direct Taxes, to the flaws in the Central Processing Zone of the Bangalore Situation Department.
On LTCG 10 percent tax over one lakh taxpayer:
After several years, Indian taxpayers will have to pay 10% tax on their Long Term Capital Gains (LTCG) if LTCG is more than Rs 1 lakh, according to the news of Economic Toms. Not only this, the government had calculated the stock price or the actual purchase price (whichever is higher) of 1 February 2018 for calculating long term capital gains.
For example, if a stock was bought for Rs 500 in 2016 and was sold for Rs 900 in March 2019 and the stock closed at Rs 800 on February 1, 2018, then the profit is not Rs 400, just Rs 100. It will be considered the department’s software system is unable to calculate long-term capital gains, especially LTCGs with multiple stocks.
The system is considering gains from trade
The second type of error is happening in the LTCG calculus of shares that were bought between 1 February 2018 and 31 March 2018. The system considers the entire money received from such trades as gain. For example, if shares in an IPO are allotted at Rs 2,000 after 1 February 2018 and are sold at Rs 4,000 per share on 15 March 2018, then the entire Rs 4000 is considered LTCG.
In July, the IT department made changes to the software of IT return forms on its e-filing website, due to which taxpayers faced many problems while filing they’re IT returns. Due to this, the government had to move forward the deadline of 31 July.