I am planning to buy a flat in FY13. Would I need to withhold any tax on the payment to the seller as per the I-T Act, 1961?
? Sameer Modgil
The Finance Bill 2012 proposed a provision where a person, while making a payment or crediting any sum by way of a purchase consideration for any immovable property (other than agricultural land), shall be required to withhold and make payment of tax @1% if the consideration exceeds the threshold limit. However, recently, the Finance Bill passed in the Lok Sabha has done away with the provision.
I am 65 years old and have a pension income of R1.5 lakh and have earned short-term capital gains of R70,000 from the sale of shares of listed companies. Will I be entitled to the basic exemption limit on the short-term capital gains?
? Pramod Deo
As per Section 111A, any short-term capital gain on the transfer of shares where the STT has been paid at the time of sale will be taxed at 15%. Also it provides for utilising the basic exemption to the extent it is not utilised by other incomes, against the short-term capital gains taxed under this Section. As such, you can avail the benefit of the entire basic exemption of R2.5 lakh against your total income, including the short-term capital gains. As your income is lower than the basic exemption limit applicable to senior citizens, i.e., R2.5 lakh, you would not be required to pay any tax on your total income.
My father held shares in some listed companies that have now been devolved to me on his death. He held these shares for 10 years. What will be the tax implications if I sell them?
? Kapil Kumar
Section 2(42A) of the Act provides that if an asset is received by way of inheritance, the period of holding of the previous owner will also be taken into account in determining whether the asset is a long-term or short-term capital asset. As such, your holding period will be calculated after adding the period for which it has been held by your father. The capital gains will be treated as long-term capital gains and be eligible for tax exemption under Section 10(38), provided it is sold through a recognised stock exchange and the Securities Transaction Tax is paid on such sale.
I have heard about the deduction under new equity saving scheme as proposed by Finance Bill 2012. Kindly elaborate.
? Raman Kapoor
The Finance Bill proposes to insert a new Section 80CCG to provide that where an assessee being a resident individual has in a financial year acquired listed equity shares in accordance with a scheme as may be notified by the Central government, he shall be allowed a deduction of 50% of the amount invested in such equity shares to the extent it does not exceed R25,000. The gross total income of the assessee for the relevant assessment year shall not exceed R10 lakh and the assessee is a new retail investor as may be specified under the scheme.
The writer is founder, RSM Astute Consulting Group
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