Your Taxes

I have been investing substantial amounts in equity-oriented mutual funds since May 2016 and had opted for dividend payout. Now I intend to switch to the growth option. The fund house shall accept this request after charging STT (Securities Transaction Tax). Because of Fair Market Value (31/01/2018) there will be Long-Term Capital Loss (LTCL). Against which gains (both short and long) can this loss be adjusted? And for how many years can I carry forward this loss?

Kirtikumar Shah

As per the provisions of the Income Tax Act, LTCL is allowed to be set off only against Long-Term Capital Gains (LTCG). The unadjusted loss can be carried forward for eight years immediately succeeding the year to which the loss pertains, and can be set off in future years against LTCG.

We would like to highlight that as per the Finance Act, 2018, LTCG of up to ₹1 lakh on sale of equity-oriented MFs (on or after April 1, 2018) shall be exempt from tax. LTCG exceeding ₹1 lakh shall be taxable at 10 per cent (without indexation benefits).

Mr ‘X’ works in Goa as a Business Development Manager for a company having office outside Goa. The company deducts ₹200 as professional tax from his salary. As there is no professional tax in Goa, is the company liable to deduct the tax at all?

Uttam Sawant

Professional tax is levied by various State governments on salaried individuals working in government or non-government entities, or in practice of any profession. The tax rate is based on the income slabs set by the respective State governments.

As per the provisions of Section 2(g) of The Goa Tax on Profession, Trade, Callings and Employment Bill, 2009, an employee includes a person employed for salary or wages in service of a body corporate which is owned or controlled by the Central or State government where the corporate operates in any part of the State. Further, as per Section 3 of the Bill, every person (up to 60 years of age and has worked for more than four months in a particular financial year) employed in any manner in the State is liable to pay professional tax.

I presume even though the company has headquarters outside Goa, Mr X is operating from an office of the company in Goa. Further, I presume Mr X has not exceeded 60 years of age and has completed four months of service in the year.

Hence, as per the aforesaid bill, no professional tax is levied for employees having specified monthly salary/wage of up to ₹15,000. However, in case the specified salary/wage exceeds ₹15,000, but does not exceed ₹25,000, professional tax is levied at ₹150 per month. In case the monthly salary/wage exceeds ₹25,000, professional tax is levied at ₹200 per month. The maximum professional tax that may be levied by a State is capped at ₹2,500 per annum.

The author is a practising Chartered Accountant. Send your queries to taxtalk@thehindu.co.in

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