» Business » Short Term Capital Gains is treated as your normal income

Short Term Capital Gains is treated as your normal income

June 28, 2007 18:57 IST
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The time has come to file your tax returns. This is the time when you ponder over the tax you paid and the investments you made.

Were you prudent with your investments last year? Did they help you save tax? Or did you end up paying more than you could afford?

What investment mistakes did you make last year? Are their ways to rectify them?

What investment options should you go for this year?

What should you do to bring your tax liability to the minimum level?

Vikas M Gandhi founder member and group head -- direct taxes, clears all your doubts.

Vikas Gandhi says, Good evening friends and welcome back to this tax chat session. You can now start with your queries and I'll be happy to resolve the same

vivek asked, What is last date for filing of tax returns for a salaried employee is it 30th june or 30th sept.
Vikas Gandhi answers,  at 2007-06-28 15:42:17For a Salaried employee, the last if filing income tax return is neither 30th June nor 30th Sept. The last date is 31st July.
sam asked, How are taxes on Short term capital gains treated? Is only the gains part added to total income or is the pricipal and income added to total return
Vikas Gandhi answers, Short Term Capital Gains is treated as your normal income only and accordingly it will be added to your total income and taxed as per the salb rates applicable to you. However is the Short Term Capital Gain is on account of Shares or Equity oriented Mutual Fund, on which Securities Transaction Tax was levied, then the gain will be taxed @ 10% only. Only gains part is charged to tax.
sam asked, The bank has not yet given me a form 16 yet, but they have deducted the taxes. I have income only from other sources. What will happen if I dont submit the return on time or is it possible for me to submit the return with the details and later give the document.
Vikas Gandhi answers, You should wait for your Form No.16A. Without form no. 16A, you'll not be able to file your income tax return because the new returns asks for detail breakup of TDS deducted. Further if you don't submit the return on time, you may have to pay interest for late filing. Hence you should approach the bank and collect the certificate at the earliest.
raj asked, I have redeemed two MF's this year. This is after completing more than one year. Please let me know whether I will have to show this in my income tax return.
Vikas Gandhi answers, Since you have earned income during the year, you should show such income in your income tax return. Irrespective of the fact whether the income is exempt or taxable, you should show them in your income tax return
dayam asked, Dear Sir, I am a salaried individual with taxable income 5Lakh + . Can I take my fathers house on rent - I mean can I say that I am a tenant in my fathers' house for income tax purpose ?
Vikas Gandhi answers, You can certainly do that. However you will have to actually make the rent payment by cheque to your father and produce a stamped receipt to your employer. Your father should also show this income in his income tax return.
Nilesh asked, Hi Vikas, I am new person to sahre trading, i want to know that if i buy share and sell and get a profit then how much tax i have to pay? Is it true that if i sell after one year then i dont have to pay tax?
Vikas Gandhi answers, If you are selling such shares through recognised stock exchange, on short term profit, i.e. you sold shares within 1 year of purchase, you'll have to pay tax @ 10% on the profit. However if it is a long term profit, i.e you sold shares after 1 year of purchase then such profit is exempt.
Nagendra asked, i have only interest income what form should i use
Vikas Gandhi answers, In a case where you have only interest income you should use ITR-1 for filing income tax return.
Dileep asked, Does any tax benifits for purchasing a laptop / Personal computer
Vikas Gandhi answers, If you are a salaried person, you do not get any benefit for purchase of laoptop / Personal computer. However if you are carrying on any business or profession, you can claim depreciation on such laptop / personal computer
Re asked, Hi, Vikas how the HRA is calculated on our salary for a salaried person.
Vikas Gandhi answers, I assume that you want to know how exemption amount of HRA is calculated. The exemption amount of HRA you receive is lower of following amounts- a) Actual HRA received b) 50% of your Basic Salary + DA (if you are based in metro cities) or else 40% of Your Basic Salry + DA c) Rent paid in excess of 10% of your (Basic Salary + DA)
sagar1957 asked, Dear Sir, Good evening. I am a salaried man with taxable income. No other incom other than salary. Which Tax form I have to use? Thanks and Regards Daya Sagar
Vikas Gandhi answers, Since you are having only salary income, you should use ITR-1 for filing income tax return.
sam asked, When is the last date for filing of returns for income from other sources only
Vikas Gandhi answers, Your last date of filing will be 31st July
newbiew asked, Schedule AIR in ITR-1 forms asks about Cash deposits totaling Rs 10 lakhs or more in a year in any savings account.Does it mean only deposit made through cash and not cheque or electronic transfers or deposits made using any mode in any savings account?
Vikas Gandhi answers, In my view it is only in respect of cash deposited in banks
naveen asked, Hi Vikas, please tell me if i am dealing in F & O, whether i am liable for TAX AUDIT
Vikas Gandhi answers, Dealing in F & O is considered as your speculation income. In my view if such income from F & O exceeds 40 lakhs during the year, you would be liable for tax audit. However you should take proper consultation in this regards before taking any action.
amar asked,  i want my wife to pay a part of the home loan EMI along which is solely in my name. can i transfer the libality partly to her and can she contribute along with me so that she can caim tax rebate on the EMI paid by her?
Vikas Gandhi answers, Firstly the loan is only in your name. I also assume that the home is also in your name. In such a case, your wife cannot contribute and take tax beenfit for EMI paid
arvind asked, Do i get the benifit on home loan interest amount for loan taken for renovation?
Vikas Gandhi answers, You can claim deduction for such loan taken. However if the property is occupied by you for your own residence, the interest will be restricted to Rs.30,000/- only.
hello asked, Hello Mr Gandhi... I have some short term capital gains on which i want to calculate the tax liability. Fox example- I bought TULITS 10 shares for the first six month at price 100, 200, 300, 400, 500, 600 and then I sold 40 shares at the seventh and eight month for 700 and 800. I still hold 20 shares and the financial year is already over. Now while calculating the tax liability can i take 500 and 600 as the cost price of shares or I have to take 100 and 200 as the cost price of shares i hve already sold. Please clarify
Vikas Gandhi answers, For calculating your Capital Gains, you have to follow FIFO - first in first out method. Hence the shares which were purchased first will be treated as sold first. In your case you will have to take 100, 200, 300 etc as your cost price
Nikhil asked, If I gift 1,00,000 to my brother, Can I deduct this amount from my earnings?
Vikas Gandhi answers, Gift is not an expenditure and hence you cannot claim such gift from your earnings, even though it is to your brother
Vikas Gandhi answers, As per the current provisions of law, you are not allowed any Standard Deduction from your Salary income. NSC accrued interest is taxable as Income from Other Sources. This interest can also be claimed as Deduction u/s 80C, since the interest amount is reinvested. However 6th year interest cannot be claimed as deduction. Amount contributed to NSC and PPF can be claimed as deduction under section 80C, with a maximum limit of Rs.1,00,000/-
SUNIL asked, Hello Mr Gandhi, I am getting Pension on a/c of Vol. Retirement from bank and besides that I earn interest on deposits ,MF dividends and also commission as I am a financial consultant with a Pvt.Indian Insurance Co. Which ITS form shall hv to be used by me for filing ITR for AY 2007-08 and will the last date for filing returns i.e. 31.07.07 be extended further as the forms are not available at CIT Office in my City ?
Vikas Gandhi answers, Set apartv your other income, since you are receiving Agency commission, you will have to fill ITR-4 for filing income tax return, as agency commission will be treated as your Business Income. Your last date of filing is 31st July. As regards extension, I am not the authorised person to say. Only CBDT can announce such extension.
Raj20 asked, I have two Form 16. How to file return. Is it Compulsory to provide both the FORM16.
Vikas Gandhi answers, I assume that both the Form 16 are from two different employers and in such a case you have to show details of both Form 16 in your income tax return.
ravi2006 asked, Hi, I have purchased flat using home loans. I will be paying nearly 50000 as principle and 2 lakhs as interest this year. how much benefit i can get in tax from this.
Vikas Gandhi answers, From the interest component, you will be able to claim deduction upto Rs.1,50,000/- and from principal component the entire Rs.50,000/- can be claimed under section 80C. (entire deduciton u/s 80C cannot exceed Rs.1,00,000/-)
Theertha asked, Hi Vikas I would like to know which form should be used to file IT returns for year 2006-2007
Vikas Gandhi answers, This will depend upon your source of income. A detailed article in this regards was published on this site, last week. Kindly refer the same.
sgrsgr asked, Iam a VRS-retired s/w prof & have freelounce inc of Rs1.2L+share trading inc of 0.4L+FD inc of 1.0L+dividends, apart from LIC-pension.Which form is applicable to me?Pls reply.Also my wife has sepaarte FDs made from her hosuehold savings & inc on these FDs is 0.5L.This would go to her inc,rt?There is no need to include this in my inc,Rt?thanks in advance, pls reply.
Vikas Gandhi answers, As far as you are concerned, in my view ITR-4 will be applicable, since you are also having free-lance income, which will be considered your Professional income. As regards your wife, the income won't be clubbed in your income and she has to file her return individually.
preeti asked, I make about 8k per month from by job as a teache and anothe 4k from tutions. Which ITR form should i use to file my return. I dont issue bills my students. Do I need them to file return.
Vikas Gandhi answers, You will have to use ITR-2 for your income. You don't require bills for filing income tax return.
Vikram asked, Hello SIr, I want to ask that if my mother receives gift in cheque from her brother in law ( Devar and Devrani ) is taxable or tax free in her hand
Vikas Gandhi answers, Gift received from Devar and Devrani will be exempt in her hands
ABK asked, Hi, I was working for the last 9 years in a MNC. From April 2007, i have quit my job and do consulting for IT projects. As a self employed can i buy laptop as an expense ? Can i hire somebody as a consultant to help in my consulting job? Can i show driver as expenses for my current work ? In short what expenses can i show ?
Vikas Gandhi answers, As you are self-employed you can claim all the expenses mentioned in your question. However as far as laptop, is concerned, you cannot claim the entire amount as expenses, but can only claim depreciation on the same, year after year from your consulting income.
harvinder65 singh asked, if a persan has salary from more than one employer how he/she can show that income in his return. Is salary certificate is valid or not? or nly farm 16 is valid.
Vikas Gandhi answers, In case of multiple employer, you have to mention the name and address of your current employer in the Salary section. Besides this details of all employer has to be shown under TDS on Salary section. If your employer has not deducted any TDS from your Salary on account of your salary below the taxable limit, then Salary certifiacte alone will do, otherwise Form No.16 will be required.
nishi asked, Hi,I have to show "1 lac" investment in this year to my present compnay.Please suggest a investment plan except insurance
Vikas Gandhi answers, Other than insurance premium, you can deposit amount in PPF / NSC (commonly invested). You can even try for ELSS, infrastructure bonds and fixed deposits with scheduled bank (for minimum 5 years)
spp asked, what is last day of filing return for salaried class
Vikas Gandhi answers, For salaried class, the last date of filing is 31st July
venuabc asked, I recevied the last year tax refund money this year june from income tax DEPT. Should I need to add this interest into this returns filing or not?
Vikas Gandhi answers, Yes, interest on Income tax refund is taxable and hence you have to add the same to your income while filing income tax return.
sachin71jain asked, I have given gift to my mother by cheq of 2 lacs for DDA shop purchased. Is any liability on me or my mother for gift made. should i show this gift in balance sheet of my mother under liabilty to me or include in capital a/c. She runs small computer proprietorship.
Vikas Gandhi answers, Since you have given gift to your mother the amount has to be added to her capital account and not to be shown as liability in her balance sheet. As far as taxability is concerned, neither can you calim such gift as expenses, nor your mother has to pay any tax on such gift. it is exempt
Vikas Gandhi says, That's all friends. It's 5.00 p.m. and time to wind up. Meet you next time. Thanks
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