No STCG tax within basic floor
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 info@rathiandmalanis.com)