What would be the Income Tax liability for FY 2008-09 under Short Term Capital Gains in this case specific?

Question

In the Budget Proposals for FY 2008-09 (AY 2009-10), Short Term Capital Gains Tax has been raised to 15%. If there is net taxable income of Rs. 300,000/= from Short Term Gains only for a non-senior citizen male assessee, no other income or savings, what would be the income tax liabilty for AY 2009-10? Please answer possibly with relevant provisions of the Income Tax Act or with the decided and established case laws/practice of likely similar situations earlier.

Do consider that income upto Rs. 1.50 lacs are generally  exempt (for non-senior citizen males) and the next slab upto Rs. 3.00 lac otherwise attracts income tax @ 10%.

Marwar · Accepted Answer

It is an interesting situation worth pondering.

To my knowledge, it should be the least of 10% & 15% upto INR 3 lacs. The simple basis of advantage would prevail in favour of assessee in the absence of any legislative clear cut contrary direction in this regard. So between 1.5 lacs and 3 lacs in this given situation, an assessee would be under obligation to pay only @ 10% Income tax even though he has derived his income from short term capital gains AND this is possible even without filing his return in ITR 4. This is in view of the threshold limit of taxation @ 10% under this bracket - the same way as the theshold limit of INR 1.5 lacs is totally tax exempt. However, above 3 lacs he would be required to pay only @ 15% and not 20%. I am sure that a clear clarification would shortly be coming on above lines from the CBDT on this aspect.

? · Answer

Income Tax Rates 2008-09

Ashish · Answer

Hi there,

You will taxable at 15% (revised tax rate for STCG) for income in excess of INR 150,000.

This is based on the budget proposals and has not yet been approved. Once approved you can refer to the Income-tax Act.

Section 45 to Section 54 covers the taxation of Capital Gains

Anonymous · Answer

You have raised a very good question.  It is a valuable question.  What you said is correct.

If your STCG are 3,00,000 after standard deduction for men the net will become 1.5 lakhs.  It is taxed @15%.

If you treat your shares gains as trading (Business) income, then you come under slab rate which is 10% on 1.5 lakhs.  You can claim it as trading income.  But you have to file your returns in ITR-4 which is more than 20 pages. 

Any way thanks for your valuable question.

Anonymous · Answer

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Anonymous · Answer

very simple , file return under ITR-4 and pay Rs.15000 + surcharge cess etc.

Anonymous · Answer

it sshould be less

What would be the Income Tax liability for FY 2008-09 under Short Term Capital Gains in this case specific?

7 Answers