In India inheritance or estate duty doesn’t apply

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: I had a query on Short Term Capital Loss and Long Term Capital Gain

1. I had purchased a flat in Dec 2005 and sold the flat in June 2009. In this transaction I made a Rs. 7 lakh gain which will be treated as Long Term Capital Gain.

2. Now can I offset the above gain with the Short Term Capital Loss which I had incurred in this financial year by sale of the shares, which I had sold on NSE, thus by paying STT.

3. I also had some Short Term Capital Gain which I had incurred by selling the shares on the stock exchange. So which one will be first offset?

Can you please answer the queries and oblige.

Chintamani

Short-term loss can be off set against long-term gain or short-term gain whereas long-term loss can only be set-off against taxable long-term gain. Since you are free to set-off both long-term gain as well as short-term gain against the short-term loss, you should set off that amount of gain on which the tax payable would be higher thereby optimizing the set-off facility.

My late mother had nominated me for her fixed deposits in banks and post offices- total amount- about Rs. 4.5 lakh or so. In her will also made in 1996, she had also stated that after her demise, the money in bank and post office should be given to me - but this will was made way back in1996 and the fixed deposits were made mostly after the year 2000.perhaps some of the money for these fixed deposits were sent by me from my provident fund account. I retired in 2006 and got some retirement funds. As I was the nominee, the funds in my mother's account were transferred to my account. Whether this money which I received from my mother's account should be added to my total income for income tax calculations?

C.V.Sarmandal

The money received from your mother’s account represents inheritance and since India doesn’t apply inheritance or estate duty, the entire proceeds will be completely tax-free. However, it would be advisable to keep detailed records so that if the tax department asks for the it, you are able to show the trace and proof of the fact that the money was indeed received under your mother’s will. Also note that any interest that you may earn out of this money will be fully taxable.