STT cannot be claimed as expense in business

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: I need your help to invest in tax-saving schemes.

1. My HUF account has income of Rs 2,30,000 this year, all from short-term capital gain (STCG) in share trading. If I buy equity-linked savings scheme (ELSS) worth Rs 1 lakh, what will be my tax liability?2. My mother, a senior citizen, will have income of Rs 1,45,000 from pension and about Rs 2,50,000 in share trading STCG. How will her income tax be calculated? Will she get any benefit if I invest Rs 1 lakh in ELSS?
Rejendra Singh

1. Deduction u/s 80C is not available for STCG but the threshold of Rs 1 lakh is available. Therefore, the tax liability would be 10% of Rs 1,30,000.

2. Your mother's normal income will come down to Rs 45,000 because of the deduction of Rs 1,00,000 u/s 80C. She, being a senior citizen, has a threshold of Rs 1,85,000 and therefore, has a gap of Rs 1,40,000 available for deduction from STCG. The tax payable would be 10% of Rs 1,10,000.

I am a salaried person. My income includes salary + long-term capital gains (LTCG) + short-term capital gains (STCG). I indulge in day trading sometimes. Under which category does this income come? Last year, I had included this income as "business income" and paid taxes at normal rates. In this financial year, I have a trading loss of about Rs 25,000. Can this loss be offset against any other income, including STT paid on these transactions? Which section of the I-T Act provides for this?
SN Sinha

Business loss cannot be setoff against salary income. STT is not to be claimed as expense in business.

Where the total income of an assessee includes business profits arising from securities transactions, he shall be entitled to a rebate u/s 88E. The rebate shall be equal to the amount calculated by applying the average rate of tax on taxable income and would be limited to the STT paid. To claim such rebate, the assessee has to furnish evidence of payment of STT along with the return of income in Form-10DB for purchase and sale of equities and Form-10DC for sale of a unit of an equity oriented MF scheme.

Needless to state that STT rebate will not be allowed also as a deduction. Consequently, in the case of business losses, the STT cannot be carried forward or refunded.