Income Tax returns (ITR) filing: Does redeeming infrastructure bond before maturity attract capital gains tax? Find out

Is there any tax to be paid on redeeming infrastructure bonds before maturity?
– Abhijit Ray

Depending on the nature and scheme of the infrastructure bond, it can be traded on the stock exchange or can be bought back. If the bond is traded on the stock exchange, gains arising from the same would  be subject to capital gain tax. Further, interest on the infrastructure bond is taxable/tax free depending on the nature of the bond.

l In case I gift Rs 5 lakh to my wife in cash or through bank transfer it is not taxable in her hands provided I gift that sum out of my tax paid income. But what about the income she has earned by depositing that gifted money. Is it taxable in her hands or in my hands?
—Ajayan Reddy

The cash transferred to spouse can be treated as gift and hence not taxable. Any income generated from such cash transferred is deemed to be income of the transferor and
not the spouse. Furthermore, income from reinvestment of the income generated from the cash transferred would be taxable in the hands of the spouse.

l If we invest in the share market and keep the shares for more than a year and make profits, is the profit taxable. How do we need to show the gains in the ITR? If we have losses, will the tax be returned next year?

—Mohit Mani

In case the long term capital gains (shares held for more than 12 months) arise from sale of equity oriented shares and where such transaction is subject to STT, the long-term capital gains would be exempt from tax. The income/loss would need to be reported in the income tax return. The loss from sale of shares will not be returned in the future years, however, the losses can be set-off within the capital gains head. Long-term capital loss can be set-off only against long-term capital gains. Short-term capital losses are allowed to be set-off against both long-term gains and short-term gains. In case the set-off is not possible in the same year, both short-term and long-term loss can be carried forward for eight assessment years immediately following the assessment year in which the loss was first computed.

The writer is tax director, People Advisory Services, EY India. Send your queries to
fepersonalfinance@expressindia.com