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I have opened a demat-cum-trading account in the name of my wife, who is a taxpayer, and I am doing some equity share transactions through this account with my own money.
Can I add the short term capital gain (STCG), if any arise out of the above transactions, to my income and pay tax? Is there any basic exemption limit for STCG?
If so, please clarify whether this exemption limit is counted after adjusting the deductions under Chapter VI-A and home loan interest to the extent of ₹2 lakh.
Ajayghosh T S
Short term capital gains (STCG) on account of sale of equity shares or units of equity oriented funds are taxed at a special rate of 15 per cent as per section 111A of the Income-tax Act, 1961 (‘Act’).
Though the demat account is in the name of your spouse, if the funds are invested by you, then clubbing provisions under section 64 would be applicable and the income arising from such fund would be taxable in your hands.
It may be noted that deduction under Chapter VI-A is not available for STCG. However, loss from housing property to the extent of ₹200,000 can be set off against the STCG and basic exemption to the extent not exhausted by other income can be set off from STCG.
My son is an NRI. He gets rental income of ₹3 lakh per annum plus ₹1 lakh per annum interest from bank fixed deposits.
What are the eligible contributions to claim deductions of ₹1.5 lakh from gross total income for NRIs?
I have been told that ELSS mutual funds are not eligible due to FATCA rule.
R L Rajkumar
Chapter VI A of the Act allows deduction from gross total income on certain investments/contributions/payments made during the year subject to a maximum of ₹150,000.
Some of the eligible deduction/contributions for a non-resident are: subscription to equity linked savings scheme (ELSS), deposits with banks under five-year tax saving fixed deposits, payment of premium on life insurance policy, principal repayment of housing loan from financial institutions, interest payable on education loan for pursuing higher studies, etc.
Investments in ELSS are still an option as financial institutions may accept investments after obtaining additional FATCA declaration
The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in
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