Profits From Share Sales Within A Year Treated As Short-Term Capital Gains; Form 10E Must Be Filed Before ITR Filing
I am a retired government officer and have income from my pension. I am trading in equity shares. Can I apply the flat rate of 15 per cent tax on my income from share trading, or would this income first be added to my pension income and then tax be calculated as per standard slabs? I do not want to claim any expenses related to my share trading activity.
Whether a particular income from listed equity shares is to be treated as business income or capital gains has been the subject matter of huge litigation, and to reduce such litigation, the Central Board of Direct Taxes (CBDT) issued a circular in February 2016 specifying the situation when the income from listed share can be treated as business income or capital gains. The first choice is with the taxpayer, and the assessing officer is bound to accept the choice so made. This applies when the taxpayer has chosen to treat it as business income or, in the case of the shares held for more than 12 months, if he exercises the option to treat the same as capital assets. However, this circular does not cover your case, and whether the profits are to be treated as business income or capital gains will depend on various factors like the average holding period, quantum of the transaction, source for making the investments, etc. If the volume of transactions is not huge, and you have used your own money, the same can be treated as a capital gain. The same has to be decided considering all the facts taken together. In case the investment in listed equity shares can be treated as a capital asset, then profits made for shares sold within 12 months will be treated as short-term capital gains and will be taxed at a flat rate of 15 per cent.
I filed my ITR on July 20, 2023, claiming relief under section 89 regarding arrears of salary received during the financial year 2022-2023. However, I forgot to file form 10E. Can I file it now, and should I revise my return as well?
Rule 21A(a), which deals with relief under Section 89, provides that the employee has to furnish form No. 10E before filing his ITR. Since you have already claimed it in your ITR, you cannot file the form 10E now. Your ITR will be processed without giving any relief under Section 89 since you have failed to file form no. 10E, even if you have claimed relief under Section 89. You can take a change by filing form 10E now and a revised ITR subsequently.
I am 32 years old, married. I fall under the 20 per cent tax bracket. My grandfather, who falls under the 30 per cent tax bracket, wishes to gift me Rs 30 lakh from the sale proceeds of agricultural land outside the municipal area, which I will invest in fixed deposits (FDs) with a bank. Will the interest from this FD would be taxable in my hands, or this would be taxed in the hands of my grandfather?
The gift recipient must pay tax; however, as long as the aggregate of all gifts received during a financial year does not exceed Rs. 50,000/-, no tax is payable. Once the aggregate value of all gifts crosses the threshold of l Rs. 50,000/- in a year, the total value of gifts becomes taxable, subject to a few exceptions. One exception provides that gifts received from specified relatives are not to be treated as income, irrespective of the value of the gifts. Grandfather is included in the definition of
specified relative for this purpose. Since you are a major, the provisions of clubbing of income will also not get attracted, and the interest received by you will be taxable in your hand under the head "Income from other sources.
Since the agricultural land is outside the limit of the municipality, it is not treated as a capital asset. Therefore, your grandfather will not have to pay any capital gains on profits made on the sale of the agricultural land.
The author is a tax and investment expert.
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