Suppose I buy shares of a company, well before its record date for bonus shares, and sell the original shares immediately after the record date at the reduced market value, keeping the bonus shares with me. Am I eligible for the concessional rate of short-term capital gains of 10% for original shares or not? If yes, up to what extent and if not, the reason thereof. For example 100 original shares purchased at the rate of Rs 200 and 1:1 bonus. So 100 shares turn to be 200 shares and the market rate falls to the extent of Rs 105 per share, after the record date of bonus shares. In such a case, shall 100 original shares sold at the rate of 105, attract the short-term loss of Rs 20,000 or not?
?Anil Kumar
The modified Sec 94(7) has been made effective from 1.4.04. The following 4 conditions are simultaneously satisfied –
1. The purchase has been within 3 months before the record date,
2. The sale has been within 3 months in the case of shares and 9 months in the case of units, after the record date
3. The dividend is tax-free and
4. The sale results in a loss (naturally, short-term).
Note that there is no provision for bonus stripping in the case of shares. It is only applicable for mutual fund units. So in your case, yes, you can claim the loss but if the transactions were for units, it wouldn?t be allowed.
I have taken a home loan from SBI. The loan amount is Rs 8.17 lakh, for which I have paid Rs 2000 as stamp duty and Rs 8200 as registration charges. Can I claim Income Tax relief for the above said amount?
?Gurudatta
Yes, you can claim the benefit of Sec 80C on stamp duty and registration charges.
I have deposited some amount in my wife?s PPF account and also paid her life insurance premium. Both the accounts are in my wife?s maiden name. I want to know whether I can get the deduction u/s 80C for the amount paid by me in her account, even when she uses her married name.
?Shashtri
You will have to attach an attested copy of your marriage certificate, while making the claim. You will do well by getting the name changed in all the accounts standing in her maiden name.
I was an initial member of a cooperative housing society. For about nine years, from 1973 to 1982, I paid, through many installments, a total of Rs 80,000 as per the demand, depending upon the progress of the construction work. I got possession in June 1982 and sold the flat in October 2007 for the consideration of Rs 12,50,000.
Now I am 66 years of age and want to live without any hassle and be at peace. If necessary, I shall give you the long list of dates and amounts when the installments were paid.
Kindly suggest how much is the capital gain for which tax has to be paid. Also, please suggest the best way of investing the capital gain amount to minimise or save income tax.
?Sarkar
The cost of construction is Rs 80,000. The fact that this was paid in installments is immaterial and inconsequential. The cost inflation index for 82-83 is 109 and for FY 07-08 it is 551. The indexed cost of acquisition is Rs 4,04,404 ((=80000x(551/109)). The long-term capital gain is Rs 3,24,404 (=404404-80000), and the tax thereon is Rs. 66,827 (=20.6% of 324404). The tax on all long-term capital gains, which are chargeable to tax, can be saved by investing within 6 months the amount of capital gains in infrastructure-related Bonds of NHAI or REC u/s 54 EC. The lock-in period is 3 years. The current interest rate is around 5.5% and this is fully taxable.
You are a senior citizen. Therefore, if your other income chargeable to tax after taking advantage of the deductions under Chapter VI-A (Sec 80C, 80D, etc) is less than Rs 1.95 lakh, the gap can be adjusted against the long-term capital gains. Note that this deduction is not available against long-term capital gains.
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