Your Queries: Income Tax- No tax relief on LTCG/STCG against property purchase

Hence, long-term capital gains are taxable at 20% (plus applicable surcharge and cess) or 10% for gains in excess of Rs 1 lakh on transfer of listed units of equity-oriented mutual fund.

Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline.
Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline.

By Chirag Nangia

Last year my financial advisor had made several changes to my portfolio. He had replaced under performing mutual funds with better funds. These resulted in lot of tax liability both short term and long term. Recently I bought a property worth Rs 12 lakh by taking a loan against my mutual funds.  Is it possible to get any relief from tax due to this investment?
Vijayalakshmi
Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline. Conservatively, investment in a property of an ashram cannot be construed as investment in a residential property. Accordingly, the investment made by you shall not qualify for exemption under Section 54F. Further, no deduction under Sections 80C to 80U is allowed from long-term capital gains. Hence, long-term capital gains are taxable at 20% (plus applicable surcharge and cess) or 10% for gains in excess of Rs 1 lakh on transfer of listed units of equity-oriented mutual fund.
Likewise, short-term capital gains referred to in Section 111A, i.e., on sale of listed units of equity-oriented mutual fund will be taxed at 15%. Any other short term capital gains will be taxable at applicable slab rates. No deduction under Sections 80C to 80U is allowed on short-term capital gains referred to in Section 111A either. However, you may claim deductions from STCG other than those covered under Section 111A. In addition, tax liability of this year shall be discharged this year itself, as there are no provisions for set-off of current year’s tax liability with that of next year’s.

I am a salaried person and have a long term capital loss of Rs 1 lakh. Which ITR form should submit?
Pravin
Any income from intra-day trading is categorised as business income and is taxable under the head ‘Profits and Gains from Business and Profession’. On the other hand, gains arising on sale of securities held as investment are taxable as long-term or short-term capital gains depending upon the period of holding. You may use Form ITR-3 to disclose particulars of income from salary, profits and gains from business and profession as well capital loss.

The writer is director, Nangia Andersen India. Send your queries to fepersonalfinance@expressindia.com

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