I have sold a residential flat after keeping it for two years. What are the tax implications and what are the avenues to save tax on the capital gain that arises?
?Rupal
In your case, as the residential flat has not been owned for a term of in excess of 36 months, the same would be treated as a short term asset and any capital gain resulting thereon would be short term in nature. Short-term gains do not carry any scope of tax reduction by way of reinvestment and are taxable at your applicable slab rate.
Recently there has been a spate of global funds. I would like to know how global funds would be taxed if kept for more than a year. If long-term capital gain is applicable, then is there any way of reducing that and if not, then are they worth investing in?
?Milind Nitsure
The recently launched global funds are essentially feeder funds that in turn invest in the international funds of their parent body. In such a case, the long-term gains are taxable at the rate of 10%, and the short-term gains are added to your other income and the tax will be determined as per the slab rates applicable to you.
However, there is another kind of global fund that seeks to invest 65% of its capital in domestic equity shares and the balance in international markets.
This kind of a fund will qualify as an equity oriented fund and hence will be eligible for tax benefits associated with equity-oriented funds. Therefore, you will have to examine the investment structure of any global fund for determining the tax impact on you.
I am working in a proprietorship concern as a manager and my salary is credited to the bank as commission, and my incentive is also credited in the same bank as incentive. Both, my salary and incentive put together equals Rs 10,000. Now my problem is I want to file my returns from this year 2006-07 but when I showed my salary, my auditor asked for Form 16, which my office does not issue. What should I do? Should I then declare my income as commission and file my returns as business or as Income from salary. I want to go for a housing loan, kindly help me in this regard.
?Raghav
It seems from your query that you are not a salaried employee i.e. you are not on the salary rolls of the company. The monthly amount that accrues to you as you yourself have pointed out, is in the nature of commission and the same has to be included under the head ?Profits and Gains from Business or Profession?.
Since this amount is not salary, the proprietorship concern will not issue you a Form 16. However, if your income has suffered any TDS, they will issue you a Form 16A detailing the TDS deducted on your behalf.
I have questions related to mutual fund investments.
(a) If I invest say Rs 25,000 in one of the debt schemes and request for STP (Systematic Transfer Plan) on a monthly basis for Rs 2,000 to one of the equity schemes starting from next month, will any tax will be deducted while transferring money from debt to equity?
(b) Which one would you suggest for an investor having NIL tax liability – i.e. whether STP from liquid fund or debt fund will give me better returns (though I am aware that the returns from these funds might vary based on market vagaries). I understand that for liquid funds one will deduct about 25% tax at source while for debt it will be around 13%.
?Rageshwari
The STP is considered to be a transfer and every time, the provisions of capital gains, short-term or long-term as the case may be, will apply. For Residents, there will be no tax deduction at source
The rates of tax mentioned by you are with respect to dividend distribution tax and not for TDS on STP. Unless you invest in the dividend option of the liquid or debt fund, dividend distribution tax will not be applicable to you.
?The authors may be contacted at wonderlandconsultants@yahoo.com