Adjust your Capital Gains against Basic exemption to reduce your Tax Liability

 

Adjust your Capital Gains against Basic exemption to reduce  your Tax Liability 

Two types of capital gains are there :

1. Short Term Capital Gains (STCG)

2. Long Term Capital Gains (LTCG)

 

1. Short Term Capital Gains :

             a.) Gains arising out of sale of Equity Oriented MF or Shares held for less than 12 months.

             b.) Gains arising out of sale of any other capital assets held for less than 24 months ( in some assets 36 months)

 

2. Long Term Capital Gains :

         a.) Gains arising out of sale of Equity Oriented MF or Shares held for more than 12 months

b.) Gains arising out of sale of any other capital assets held for more than 24 months ( in some assets 36 months)

 

Tax Treatment:

 

1. STCG Tax Treatment

 

a. Special STCG - covered U/S 111(A) : Section 111A is applicable in case of STCG arising on transfer of equity shares or units of equity oriented mutual-funds or units of business trust, which are sold  through a recognised stock exchange .

Tax of such gains are charged @15% + 4% cess

 Please note that Debt Oriented Mutual Funds , Preference shares etc are not covered U/S 111A

 b. Normal STCG : All STCG not covered U/S 111A is normal STCG : Taxation as per slab rate

 For STCG covered U/S 111A If income is less than 250000 , one can club  STCG income to make it Rs. 250000 and pay 15% tax on balance STCG

however no rebate will be allowed U/S 80C to 80U in such cases.

  

For STCG not covered U/S 111A (normal STCG) clubbing is not allowed If income is less than 250000 , but one can claim rebate U/S 80 to 80U

 

Examples :

My Salary/Pension income is Rs 2 Lakh and STCG (covered U/S 111A) is Rs.50000 . what will be my Tax.

 

Total Income :           2,00,000

STCG income  :           50,000 (clubbed to make it 2.50L)

Total        :                 2,50,000

Less Basic Exemption : (Tax free Income) , Rs 250000

Tax will be nil

  

My Salary/Pension income is Nil  and STCG (covered U/S 111A) is Rs. 250000 . what will be my Tax.

 

Salary Income :               0.00

STCG income  :        2,50,000 (clubbed with salary income to make it Rs. 2.5L)

Total        :                  2,50,000

Less Basic Exemption : (Tax free Income) , Rs 250000

Tax will be nil

 

 

My Salary/Pension income is 240000  and STCG (covered U/S 111A) is Rs. 50000 . I have also invested 1.50 L in PPF .what will be my Tax.what will be my Tax.

 

Salary Income :  2,40,000

STCG income  :     50,000 (clubbed only Rs. 10000)

Total        :           2,90,000

Exemption in PPF will not be allowed as gain is covered U/S 111A

 Less Basic Exemption : (Tax free Income) , Rs 250000

 Balance income (salary Nil, STCG Rs. 40000, ( as Rs.10000 adjusted to make it Rs. 2.5L)

Tax will be (40000*15%)=Rs. 6000 plus 4% cess (since salary income is within tax free range , no tax on salary income)

 

My Salary/Pension income is Rs. 6 lakh  and STCG (covered U/S 111A) is 50000 . what will be my Tax.

 

Salary Income :  6,50,000

STCG income  :     50,000 (not clubbed as salary income is already >2.5L)

Total        :           7,00,000

 Balance income   Rs. 450000 (4 lakh salary & 50k STCG)

Salary Tax :Rs.7500 ,  STCG Tax (50000*15%)=Rs. 7500, Total Tax = Rs.15000 plus 4% cess

  

b. Normal STCG : All STCG not covered U/S 111A is normal STCG : Taxation as per slab rate

My Salary/Pension income is 240000  and STCG (not covered U/S 111A) is Rs. 50000 . I have also invested 1.50 L in PPF .what will be my Tax.

 

Salary Income :  2,40,000

STCG income  :     50,000 (can't be clubbed , but have to add in total income)

Total        :           2,90,000

 Less

PPF (80C)           1.50,000

Rebate in PPF allowed as gain as not covered U/S 111A

Taxable Income   1,40,000

 

Tax Nil

My Salary/Pension income is Rs. 6 lakh  and STCG (not covered U/S 111A) is 50000 . I invested Rs.1,50,000 in PPF , 25,000 in health Insurance  what will be my Tax.

 

Salary Income :  6,50,000

STCG income  :     50,000

Total        :           7,00,000

 

less U/s 80c        1,50,000

     U/S 80CCD       20,000

Total Rebate       1,70,000

Taxable Income : 5,30,000

Tax : Rs 18500 + 4% Cess

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