l Can I set off long-term capital gains with losses incurred in futures and options?—Rahul Kumar
As per Section 43(5) of the Act, trading in Futures and Options (F&O) transactions are classified as non-speculative business transactions and any gain or loss from such transactions shall be taxable under the head ‘Profits and Gains of Business or Profession.’ Further, Section 71(2A) of the Act permits set-off of such business losses against income from any head other than “Salaries.” Accordingly, losses from F&O transactions can be set off against income from long-term capital gains.
l I am paying two rents, one in Delhi for myself and the other in Mumbai for my parents. Can I claim HRA on the rent paid by me for my dependent parents?—Lakshya Suri
Exemption in respect of House Rent Allowance (HRA) is available only when the employee actually pays rent for a residential accommodation occupied by him. In your case, the rent you are paying for the Delhi house (where you reside) will qualify for HRA exemption. However, the rent paid for your parents’ accommodation in Mumbai cannot be considered for your HRA claim. This is because the law requires the rent to relate to the property occupied by the employee himself for his own residence only.
l How capital gains arising out of shares held in a foreign country are treated from Indian IT is concerned? I am a resident in India.—Manoj Sharma
As per Section 5, a resident in India is taxed on his global income, i.e., income earned in India as well as income earned outside India. This means that capital gains from the sale of foreign shares are fully taxable in India, even though the shares are situated abroad. Furthermore, any capital gain arising from transfer of shares held in a foreign company is treated as unlisted securities.
If the shares are held for more than 24 months, the gains will be treated as Long-Term Capital Gains (LTCG); if held for 24 months or less, gain will be treated as Short-Term Capital Gains (STCG). Notably, LTCG on unlisted shares are taxable at the rate of 20% with indexation for transfers before July 23, 2024, and at a rate of 12.5% without indexation for transfers on or after that date. STCG on unlisted shares are taxable at the applicable income-tax slab rates, irrespective of the transfer date. Besides that, any foreign taxes paid on such capital gains, if any in accordance with laws of the foreign country, would be eligible to claim foreign tax credit (FTC) in India by filling Form 67 before the end of relevant assessment year.
The writer is tax partner, AKM Global, a tax and consulting firm. Send your queries to fepersonalfinance@expressindia.com