l I sold a residential property which I had bought in 2012 and there are no capital gains. I am a pensioner. Do I need to file income tax return for this sale?
While filing income tax return, one must disclose income from all sources irrespective of the amount, else at the time of processing of return, the income tax department could raise a question or make adjustment on account of mismatch. You have to disclose the sale consideration, cost of acquisition and the resultant capital gains on account of sale of property.
l How can I claim capital gain tax exemption of Rs 50 lakh each under both Section 54EC and Section 54EE?
Where capital gain arises from the transfer of a long-term capital asset, the assessee can claim deduction under Section 54EC, by investing the gains in specified assets like bonds of REC/NHAI, within a period of six months from the date of transfer. The total investment in the financial year and the subsequent financial year is limited up to Rs 50 lakh. Similarly, where capital gains arising from the transfer of a long-term capital asset are used for investing in specified funds, the taxpayer is entitled claim exemption under Section 54EE. The exemption under this section is also restricted up to Rs 50 lakh in the financial year and the subsequent financial year. As per the provisions of the law, Section 54EC and Section 54EE are not mutually exclusive. No restriction has been imposed in respect of claiming exemption under both the sections. Therefore, you may claim deduction under Sections 54EC and 54EE of Rs 50 lakh each.
l As I do futures and option (F&O) trading sometimes, what is the taxation rule?
Under Indian income tax laws, income from futures & option trading is classified either as ‘business income’ or ‘income from other sources’. If the transactions are of regular frequency, then such gains/ losses are classified as ‘business income’. In case these are one-off transactions, then such income/ loss may be considered as ‘income from other sources’. If classified as business income and transacted on a recognised stock exchange, the income derived from trading of derivatives are taxable as non-speculative business income for income tax purposes (i.e., normal business income) and are subject to tax audit if turnover is more than Rs 1 crore. This threshold shall be increased to Rs 5 crore in case of a person whose (a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed 5% of the said amount; and (b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment.
(The writer is director, Nangia Andersen India. Send your queries to firstname.lastname@example.org)