I incurred the following capital gains and losses in FY12 from the sale of shares only: long- term capital gain (LTCG) of Rs1.10 lakh, long-term capital loss (LTCL) of Rs58,000, short-term capital gain (STCG) of Rs21,000 and short-term capital loss (STCL) of Rs2,500. I know that LTCG of Rs1.10 lakh is not taxable. Will I be able to carry forward LTCL of Rs58,000 to the next fiscal year? If not, how can I use this loss amount for reducing my overall tax liability? STCG tax will be calculated at 15% on the net STCG (STCG minus STCL or Rs21,000 –2,500 or Rs18,500). In other words, STCG tax of Rs2,775 will be levied. Is this calculation correct?
As per the provision of section 10(38) of the Income-tax Act, 1961, LTCG arising from sale of equity shares is exempt from tax provided securities transaction tax (STT) has been paid on such transaction. If the LTCG amounting to Rs1.10 lakh complies with the aforesaid conditions, it shall be exempt from tax. Regarding setting off LTCL, if the gains from certain transactions are exempt from tax, the loss arising on such transactions may not be permitted to be set off or carried forward. This interpretation is based on certain judicial pronouncements. Hence, LTCL on the sale of shares (income from which is exempt from tax) amounting to Rs58,000 may not be permitted to be set off or carried forward.
STCG from equity shares sale in a firm are taxable at 15% under section 111A of the Act provided such equity shares are sold through a recognised stock exchange and such transaction is chargeable to STT. Further, such STCG shall be computed after setting off any loss arising from that source. Net short-term capital gains amounting to Rs18,500 shall be taxable at 15% (exclusive of applicable surcharge of 5% and cess of 3%, wherever applicable).
I have an education loan of Rs7.5 lakh. As of now, I have to repay Rs3.5 lakh. Can I claim tax relief this year on the basis of only this loan?
As per the provisions of section 80E of the Income-tax Act, an individual can claim deduction in respect of interest paid on loan taken from any financial institution or approved charitable institution for pursuing higher education or for higher education of a relative. The deduction can be claimed from the year in which the individual starts paying the interest on the loan up to eight years. Higher education means any course of study pursued after passing senior secondary examination or its equivalent. Thus, you can claim deduction for the interest paid on the loan in this year, if this year falls within a block of eight years from the year in which you had started paying the interest on the loan.
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