No STCG tax within ba­sic floor

Deccan Chronicle - - Money -

QI am an event man­ager and work­ing for the past two years un­der a con­tract for an or­gan­i­sa­tion in Hy­der­abad. I am not un­der their pay roll and not en­ti­tled for any ben­e­fits like the other staff mem­bers but re­ceive a cer­tain ser­vice charge reg­u­larly. This is a uni­form amount right through the year. Over and above this, I am also el­i­gi­ble for a com­mis­sion on each job han­dled over and above a spe­cific num­ber which is not a reg­u­lar hap­pen­ing. Tax is de­ducted at source. I am a se­nior cit­i­zen. Kindly clar­ify un­der what head my in­come will be taxed. The re­fund claimed in ear­lier years is not re­ceived so far. Please ad­vise me the pro­ce­dure to claim the re­fund al­ready due to me. JANARDANAN.K.P.

Via email

A) Your in­come from event man­age­ment and com­mis­sion should be charged un­der the head “Prof­its & Gains from Busi­ness or Pro­fes­sion”. You are also el­i­gi­ble to claim any ex­penses in­curred to­wards car­ry­ing out the said busi­ness. As re­gards your re­fund, you may ap­ply for a re­fund reis­sue re­quest on­line on the in­come tax web­site or you are ad­vised to meet the As­sess­ing Of­fi­cer where your re­turn of in­come is filed along with the ac­knowl­edge­ment of re­turn filed and the com­pu­ta­tion state­ment to check the sta­tus of your re­fund amount.

QI am a small trader/in­vestor, and I have no in­come from salary as I am not em­ployed. I de­pend only on my in­come from prof­its earned on buy­ing and sell­ing of shares as a small in­vestor. I earned a short-term cap­i­tal gain of `1.5 lakh dur­ing this year.

My ac­coun­tant says that I must pay 15 per cent tax on the short-term gain, ir­re­spec­tive of the fact that I do not earn any wages or salary in­come. On the ba­sis of this ad­vice, I paid a tax on short-term cap­i­tal gains earned dur­ing 2018-19 as­sess­ment year, although I have no wage in­come. I paid tax with­out avail­ing the manda­tory in­cometax ex­emp­tion avail­able to salary earn­ers. I also stopped trad­ing fur­ther to avoid higher tax.

My ques­tion is whether the ad­vice of the ac­coun­tant is right or wrong. Is the manda­tory in­come tax ex­emp­tion meant only for salaried per­sons and not for those hav­ing in­come from short-term cap­i­tal gains.

GOPAL Via email

A) Ac­cord­ing to Sec­tion 111A, in the case of an in­di­vid­ual or a HUF, be­ing a res­i­dent, where the to­tal in­come as re­duced by such short-term cap­i­tal gains is be­low the ba­sic ex­emp­tion limit, then the short term cap­i­tal gain will be re­duced by the amount of ba­sic ex­emp­tion limit not ex­hausted by any other in­come and only the bal­ance short term cap­i­tal gain shall be charge­able to tax at the rate of 15 per cent.

There­fore, you are not li­able to pay in­come-tax on the in­come earned from short-term cap­i­tal gains as your to­tal in­come in­clud­ing the short­term cap­i­tal gains is be­low the ba­sic ex­emp­tion limit. The law does not dis­crim­i­nate the tax­a­bil­ity of any in­come un­der a par­tic­u­lar head on the ba­sis of an as­sessee be­ing as­sessed un­der a spe­cific head of in­come.

QThe law does not dis­crim­i­nate the tax­a­bil­ity of any in­come un­der a par­tic­u­lar head on the ba­sis of an as­sessee be­ing as­sessed un­der a spe­cific head of in­come.

I have two chil­dren study­ing in pri­mary school. I am pay­ing `75,000 per year as a tu­ition fee. What is the max­i­mum tu­ition fee ex­emp­tion al­lowed? RAJ KU­MAR Via email

A) Tu­ition fee paid by an in­di­vid­ual to any ed­u­ca­tional in­sti­tu­tion in In­dia for the for full time ed­u­ca­tion of his two chil­dren is al­lowed as de­duc­tion un­der Sec­tion 80C. This is sub­ject to an over­limit of `1.5 lakh un­der 80C, which ap­plies to in­vest­ments and qual­i­fied sav­ings like EPF, PPF, NSC, FD, ELSS. The tu­ition fee should not pay­ment to­wards de­vel­op­ment fees or do­na­tion or pay­ment of sim­i­lar na­ture.

(The writer is a Hy­der­abad-based char­tered ac­coun­tant. He can be reached at [email protected]­and­mala­nis.com)

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