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If you pay STT while selling shares, STCG is taxed at 15%

However, if STT is not paid, then STCG shall be taxable as per the applicable tax slab rate.

I am a tax-paying senior citizen. I get income through pension, dividends and interest income. I plan to book profits on some shares that I have held for just three months. Do I have to pay a flat 15% tax or am I entitled to some relief against the relevant tax slab?

—Sagar

As you propose to sell the shares that are held for less than 12 months from the date of acquisition, the gains, if any, resulting from sale of these shares will be classified as short-term capital gains (STCG). The STCG should be computed as the difference between net sale proceeds (after deducting the incidental transfer charges) and cost of acquisition.

While selling the shares, if you pay the security transaction tax (STT), STCG will be taxed at a flat rate of 15%. Additionally, if your total taxable income during the financial year 2013-14 (FY14) exceeds 1 crore, you will have to pay surcharge at 10% on the basic rate of 15%. Further, you will have to pay an education cess of 3% on the basic as well as surcharge (if surcharge is also applicable in your case). However, if STT is not paid, then STCG shall be taxable as per the applicable tax slab rate. Further, surcharge, if applicable, and education cess will have to be applied.

Further, resident senior citizens (60 years or more in age) who do not have income from business or profession are exempted from paying advance tax during the FY as per the prescribed instalments. Accordingly, you can pay taxes as “self assessment tax" on taxable income after the FY ends on 31 March but the same should be paid before filing tax returns.

If your total taxable income excluding STCG is below the threshold taxable limit, then such shortfall can be adjusted against STCG. The balance STCG will be taxed at 15% plus applicable surcharge and education cess.

My father wants to pass on some money to me as inheritance. Will it be subject to tax? Will the liability be different if I invest in something?

—Ankit Pandey

The entire money received by an individual from any person during any FY without consideration, the aggregate value of which exceeds 50,000, is taxable under the head “income from other sources". However, an exemption is available if the money is received from a relative, including among others, any lineal ascendant of the individual. Accordingly, the money received by you from your father under inheritance shall not be taxable in your hands.

You may examine the documentation/registration and applicability of stamp duty with respect to such gift transaction.

The subsequent income, if any, earned by virtue of investment of the gifted amount in various investment avenues by you in your name shall be taxable in your hands.

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