Short-term capital loss can be setoff against short-term capital gains

Written by AN Shanbhag | Sandeep Shanbhag | Updated: Jan 27 2008, 06:25am hrs
I had opened a PPF a/c in 1989, which I had extended in 2004 at the end of 15 years. Balance at the time of extension was Rs 7 lakh. Now the balance is Rs 10 lakh. How much money I can withdraw now I have never withdrawn a rupee till today from the account.

As per my bank I can withdraw only Rs 3.5 lakh i.e., 50% of the 2004 balance at the time of account extension. Please help me by your clarification


Your bank is under a wrong impression that the amount of withdrawal is 50%. It is 60%. A subscriber, continuing his account with fresh subscriptions, can withdraw up to 60% of the balance to his credit at the commencement of each extended period in one or more installments, but only one per year. You should be allowed to withdraw Rs 4.2 lakh.

Q: Recently I received instructions from my Head Office that on the interest accrued on PF for the period beyond the date of retirement, tax is to be deducted at source. The explanation for this is given as under: -

"As per clause 2(f), of part 'A' of Fourth Schedule, the accumulated balance due to an employee means the balance to his credit or such portion thereof as may be claimable to him under the regulations of the fund, on the day he ceases to be employee of the employer maintaining the fund."

"On reading the Section 10(12), in conjunction with the definition of 'accumulated balance due to an employee', it is apparent that once the employee-employer relationship ceases to exist, the interest payment, subsequent to that date will attract the provision of Section 194A, as if interest payable to a third party"

It has been further clarified that there is no TDS for amount of interest below Rs. 5,000 and also in case the recipient is other than the ex-employee, i.e., a nominee in case of deceased ex employee, there is no TDS

Until now, we were treating this interest on PF totally tax-free. Kindly clear my doubt on this issue, so that retired employees are not put to any hardship due to TDS.

K Gupta

Your office is taking the view expressed in the case of ONGC Ltd v Income-tax Officer (TDS), Dehradun ITAT Delhi Bench 'A'. Understandably, if the interest is to be treated as taxable income, TDS will be applicable, as provided by the ITA.

Q: If I buy & sell shares --- in which format am I supposed to give the relevant details The broker's bill is confusing. It is difficult to arrive at my cost of acquisition. I am told that the entire amount paid to the broker cannot be taken as my cost of acquisition.

One more query. I have been dealing for my wife and my son through my trading account with ICICI. How shall their tax liability be passed on to the real beneficiary. Can short-term capital loss be setoff against gains

Subhash Bhandakkar

1. There are no attachments required for the new income tax returns forms. Maintain the record in any format you desire. If and when the authorities ask for the details, you should have them ready with you.

2. Any taxes paid such as Security Transaction Tax, stamp duty, service tax, etc, cannot be taken into account for arriving at the cost of acquisition or sale.

3. You will have to have trading accounts of your wife and son separately. Hope your son is not a minor.

4. Short-term capital loss can be setoff against short-term capital gains but not against long-term capital gains (which are exempt in any case). Such losses neither can be setoff against any other income nor can the deductions under Chapter-VI of the Income Tax Act (contributions to PPF, premium for mediclaim, etc) be claimed.

Q: Do reinvested Dividends from an ELSS Scheme qualify for rebate under Sec 80C


Yes. It is a fresh investment in the ELSS and will be entitled to the deduction u/s 80C within the overall ceiling of Rs 1 lakh in the FY, during which the investment is made.

Q: As per the current regulation made by Sebi, an investor in a mutual fund has to submit a copy of their PAN card. Therefore, a person under the category of non taxable income has also to get the card. Is it necessary for such a person to submit IT Returns And what about a minor if somebody wants to invest in the name of a minor


An apparently wrong notion that is prevailing is that, if a person obtains a PAN, he must statutorily file a return of income. There is no such requirement.

In the case of minors, it is necessary for both the minor and his guardian to have PAN.

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