Tax Talk

My annual income from salary is ₹2,25,000. As per the new LTCG on equity and equity-oriented mutual funds, if I make a profit of ₹1,25,000 in a financial year, what is my tax implication?

After exempting ₹1,00,000 from ₹1,25,000 profit, if I add the balance (₹25,000) to my salary income, it would be ₹2,50,000. It is still within the exemption limit of ₹2,50,000 per annum.

Will I have to pay any tax in this situation? Please advise.

A M Rao

Long-term capital gains (LTCG) are taxed at special rates. In case of resident individuals, if the total income, including LTCG, is within the exemption limit of ₹2,50,000, there will not be any tax implications.

Assuming that you qualify as a tax resident of India for the FY 2018-19, your total income, including LTCG, does not exceed the basic exemption limit of ₹2,50,000.

As a result, there you will not be required to pay taxes for 2018-2019.

Does LTCG on redemption of equity mutual funds/equity shares made between February 1, 2018 and March 31, 2018 enjoy full tax exemption as the Budget 2018 proposal for imposition of tax on LTCG will be applicable only from April 1, 2018?

A Venkat

Yes. Budget 2018 proposals on taxing long term capital gains arising from sale of listed equity shares/mutual funds, once approved, will be effective from April 1, 2018. Accordingly, long term capital gains arising during February 1, 2018 to March 31, 2018 will continue to enjoy income tax exemption.

This is also clarified by the Central Board of Direct Taxes (CBDT) vide their frequently asked questions (FAQ) dated February 4, 2018.

As per Government clarification, we understand that housekeeping services of residential apartments are not subject to GST. But we are asked to pay GST on house keeping services provided by our Association.

All 23 flats owners who are all members of the association maintain a pooled account for these services. Presently, our total expenses are about ₹23 lakh per annum, which includes remuneration of sweepers, security guard, garbage cleaners, electrician, plumber, common area lighting charges, electricity charges, etc. Please let me know if we are exempted from GST.

Choudhary House

As per the GST regulations, residential apartment maintenance charges would be exempt only if the maintenance charges per residential unit is ₹5,000 or less per month. From the query, it is understood that there are 23 residential units in the complex and the expense per annum aggregates to ₹23 lakh, which works out to ₹1,00,000 per annum per flat per apartment.

This will translate to monthly maintenance charges of more than ₹5000 and, hence, GST will apply.

The writer is Partner, Deloitte India

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