YOUR QUERIES: INCOME TAX — Profits on sale of listed NCDs held for more than 1 year classified as long term

October 12, 2021 1:00 AM

Interest on NCD is taxed under head ‘other sources’ at applicable slab rates, paid periodically or cumulatively.

The process of e-verification through Aadhaar OTP and other methods is important for the department to commence processing of the ITR and to issue refunds, if any.The process of e-verification through Aadhaar OTP and other methods is important for the department to commence processing of the ITR and to issue refunds, if any.

By Chirag Nangia

What is the tax on NCDs with cumulative payment option if held for more than 36 months? And what should be the tax applicable on listed vs non-listed NCD?
—Devanshu Agarwal
Interest on NCD is taxed under head ‘other sources’ at applicable slab rates, paid periodically or cumulatively. Interest is not subject to tax deduction at source if NCDs are held in dematerialised form and are listed on a stock exchange. Profit on sale/ redemption of NCDs has to be offered to tax as ‘Capital Gains’. For listed NCDs, gains are classified as long term, if NCDs are held for a period more than one year, else it is treated as short term. Gains from sale of unlisted NCDs are long term if the debentures are held for more than 36 months. While STCG is taxed at applicable slab rates, LTCG is taxed at a flat rate of 20% with indexation. However, for listed NCDs, LTCG may be computed at 10% without indexation/ 20% with indexation, as per your choice.

I am a salaried person and have less than Rs 1 lakh LTCG from equity shares. For filing ITR of AY 2021-22 , do I have to mention my LTCG in capital gains in ITR 2 or do I need to file ITR 1 since LTCG is less than Rs 1 lakh?
—Tushar Chawla
While filing ITR, details of income from all sources, whether taxable/ exempt, have to be disclosed. Therefore, although LTCG on sale of listed equity shares and units of equity-oriented mutual funds, less than Rs 1 lakh are not taxable, you have to disclose all in ITR 2.

I received Rs 7,000 as LTCG. My other source of income is interest from bank deposits. As it is less than Rs 1 lakh, do I still have to show it in ITR?
—R Kesavan
You must disclose it in the ITR (sale consideration, cost of acquisition, etc.). The ITR utility shall automatically grant exemption and you shall not be required to pay tax thereon. Form 26AS contains all the details pertaining to TDS, tax collected at source, advance/ self-assessment taxes paid, etc. In case of resident taxpayers, long-term capital gains referred above are not subject to TDS. Therefore, it will not be reflected in Form 26AS. Nevertheless, the department has access to information relating to transactions in securities.

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

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