Tax Insights on Sale of Flat & Defective Return

Arjuna – Krishna today I have two questions for you. Can I ask you?
Krishna – hey Arjuna, off course you can.
Arjuna – 1st question for you Krishna is – I have flat which was purchased by me way before 2001. I want to sell it now. So can you please tell me how should I calculate the tax to be paid on sale if any and can I save on tax from this sale? I am little worried.
Krishna – hey Arjuna don’t worry. I am here to help you out. Since you have purchased your flat way before the year 2001, cost of acquisition will be determined based on the fair market value (FMV) or the stamp duty value (SDV) as of 1st April, 2001, whichever is lower. Got it. Now as you know there is an amendment made by the Finance Minister this year onwards. So listen it carefully. As per the Finance Bill, 2024 the long term capital gains tax (LTCG) would be levied at 12.5% without indexation or at 20% if you want to avail of the indexation benefit. Moreover, you can avail tax exemption u/s 54 by purchasing a new residential property within a year before or two years after the sale date, provided you hold the new property at least for 3 years. Alternatively, you can invest the LTCG in specified bonds too. Investment limit in bonds is Rs.50 lakh, with a lock-in period of 5 years. And before taking the final decision do the calculation under both the regime – old as well as new. Hope now you got the clarity.
Arjuna – Yes, off course. Thanks a lot Krishna.
Krishna – now please go ahead with your 2nd question.
Arjuna – Yes Krishna. My 2nd question is  – can you please tell me what are the errors and or mistakes makes a filed Return defective? And what one can do if he or she received a Defective Notice?
Krishna – hey Arjuna, I will answer your both the queries in 2nd question one by one. Let’s first understand what are the errors and or mistakes which make your filed Return Defective. Under Section 139(9) of the Income Tax Act, 1961 when

Credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation
The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of the receipts shown under all heads of income, in the return of income.
“Gross Total Income” and all the heads of income is entered as “nil or 0” but tax liability has been computed and paid.
Name of taxpayer in ITR does not match with the “Name” as per the PAN data base.
Taxpayer having income under the head “Profits and gains of Business or Profession” but has not filled Balance Sheet and Profit and Loss Account.

Now we will see what one has to do if he or she received a defective notice.

Prompt action is required
One must respond within 15 days from the date of the receipt of the notice
One must navigate to e-file after login to the income tax portal and then file a revised return if you agree with the defect mentioned in the notice or you can select “Disagree” option and provide an explanation.
However, if your explanation is rejected then you can file appeal before the Commissioner of Income tax (Appeals).

Arjuna, I hope your both the questions for today resolved now.
Arjuna – Yes, off course. Thanks a lot Krishna.
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