Your taxes

I am a senior citizen earning a monthly pension of ₹34,000. In FY 2017-18, I sold some shares and earned an amount of ₹1,000.

Is it possible for me to file ITR-1 where this amount is taken into account?

V Vijayagopalan Nair

ITR-1 can be filed only by individuals having income from salaries, one house property (excluding cases where there is brought-forward/carry-forward losses) and other sources (excluding winning from lottery and income from race horses).

Since you have earned capital gain income from sale of shares, ITR-1 cannot be filed. Instead, you would need to file your tax returns in form ITR-2.

I am a senior citizen. For AY2018-19, my net taxable income is ₹1,25,000, out of which ₹35,000 is due to long-term capital gain on redemption of debt-oriented mutual fund units for which no security transaction tax (STT) was paid.

While filing the tax return online, my tax liability is being shown as 10 per cent of ₹35,000, i.e. ₹3,500. Next, a rebate of ₹2,500 is allowed u/s 87A. Thus, the net tax liability is ₹1,000 + education cess.

Since my net taxable income is below the threshold limit, am I liable to pay any income tax?

Saktinath Mukherjee

As per the provisions of the Income Tax Act, 1961, a relief is available to resident senior citizens if the taxable income excluding long-term capital gains is less than the basic exemption limit of ₹3,00,000. The relief shall be the excess of the basic income exemption limit over total income excluding long-term capital gains.

In your case, you have a total income of ₹1,25,000 comprising long-term capital gains of ₹35,000 and other income of ₹90,000. You are a senior citizen (over 60 years of age and less than 80 years).

Accordingly, the value of relief will be ₹2,10,000 (₹3,00,000-(₹1,25,000-₹35,000)). As the value of relief is in excess of long-term capital gains, there should not be any tax liability.

The writer is Partner, Deloitte India. Send your queries to tax talk@thehindu.co.in

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