Income Tax Returns (ITR) filing: Demat accounts and capital gains tax; see how transfer of shares works

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Published: December 6, 2017 1:11:26 AM

Transfer of shares from one demat account to another of same person has no tax implication

Income Tax Returns, Income Tax Returns filing, Demat accounts, capital gains taxTransfer of shares from one demat account to another of same person has no tax implication (Reuters)

My father is the first holder and my mother the second holder in a demat account (A1). In another demat account (A2) my mother is the first holder and father the second holder. Both accounts have equal no of SBI shares. If they transfer all the shares from A1 to A2, will it attract long term capital gains tax? – Anuj Doshi

Transfer of shares from the jointly held account A1 to the jointly held account A2 shall not be regarded as “transfer of capital asset” under Section 2(47) of Income Tax Act. It is merely transfer of securities from one demat account to another account belonging to the same joint holders. Thus, such a transfer will not have any tax implication.

I sold my six-year-owned flat for Rs 50 lakh and paid 1% TDS. I have reinvested Rs 39 lakh by buying a house, and spent Rs 11 lakh for other purposes (return of private loans, family expenses, etc). Can I claim full refund of my TDS of Rs 50,000 (1%) or partial refund of Rs 39,000? —Ashish Duggal

The Income Tax Act mandates that on sale of property above Rs 50 lakh, tax at the rate of 1% shall be deducted on the sale consideration before making payment to the seller. The seller is entitled to claim a credit of the 1% TDS at the time of filling the income tax return. Further, as per Section 54, you can claim exemption from capital gain tax by investing the amount of capital gain in new residential property. In this case, if your capital gain is Rs 39 lakh or less, you shall not be liable to pay any capital gain tax and hence credit of TDS of Rs 50,000 can be claimed at the time of filing the return.

When I purchased my flat I had paid Rs 30 lakh but stamp duty was paid on value of Rs 40 lakh. So what will be the purchase value for calculation of capital gain? —Daljeet Singh

Where an individual receives an immovable property and the purchase price of the same is less than the Stamp Duty Value on that date, then the difference between the purchase price and the Cost of Acquisition is taxable as income from other sources as per Section 56(2)(vii) of the Act. If the property has been subject to income tax under Section 56(2)(vii), then cost of acquisition is deemed to be the value which has been taken for the purposes of Section 56(2)(vii) of the Act. Therefore, in the above case, if the above property has been subject to tax under Section 56(2)(vii) previously, cost of acquisition shall be taken to be Rs 40 lakh. Otherwise, it shall be Rs 30 lakh.


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