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solve it........

Rahul Bansal (Finalist) (35929 Points)

24 October 2009

R, has computed his gross total income for the A.Y. 2009-10. which amounted to Rs. 290000.

It includes:

*Rs. 150000 on account of LTCG &,

*Rs. 10000 on account of winning horse races.

He has deposited Rs. 70000 in a PPF during the P.Y.

Compute the tax payable by R, assuming that :

1. he is less than 65 years of age.

2. he is more than 65 years of age & resident in India.

3. he is more than 65 years of age & non-resident in India.

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5 Replies

chintan mehta (Chartered Accountant) (445 Points)
Replied 24 October 2009

if he is less than 65 yrs..

deduction u/s 80C to U is not applicable to long term capital gains.

so the tax computed will be on 220000

since R is taxable only because of capital gains the tax liability comes to

220000-160000 (i.e 50000 @ 20% = Rs. 10000 and horse income @ 30% of 10000 =3000)

total =13000+EC+SHEC

if he is more than 65 yrs

then the taxable income comes to 220000 , hence not taxable

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Mangesh (Chartered Accountant) (50 Points)
Replied 24 October 2009

Rs.10000/- will get taxed @ 30% flat rate .

Rahul Bansal (Finalist) (35929 Points)
Replied 24 October 2009

thanks

Mithreshan (Articled Trainee) (60 Points)
Replied 24 October 2009

LTCG-Rs.150000, Winning....-Rs.10000, 'Other' Income-Rs.130000

CASE 1 :

Winning.. Rs.10000 taxable @ 30%(u/s115BB) - Rs.3000
LTCG Rs.150000 taxable @ 20% (u/s 112 - after basic limit exemption for Resident Ind & HUF). Therefore LTCG taxable wud be

150000-[150000-(130000-70000)]

LTCG-[Basic Limit-('other' income-PPF u/s 80C)]

= 60000 * 20% = Rs.12000

Total Tax Payable wud be - (12000+3000)Rs.15000+450(cess)=Rs.15450

CASE 2 :

Same as above - Rs.3000
Now Basic Exemption Limit wud be Rs.225000, and therefore LTCG wont be taxable, [since after adjusting Rs.60000(other income after 80 C dedn.) against the basic limit of Rs.225000, still Rs.165000 wud be available for adjusting against LTCG whereas LTCG=Rs.150000 only]

Total Tax Payable wud be-Rs.3000+90= Rs.3090

CASE 3:

Same as above - Rs.3000
Whole of LTCG - Rs.150000 wud be taxable @ 20% [since adjusting Basic Exemption Limit against LTCG is not allowed for Non Residents] - Rs.30000
Other income - Rs.130000-70000< basic exemption limit of Rs.225000, therefore no tax

Total Tax payable - (3000+30000) Rs.33000+990=Rs.33990

my doubt is whether Winning.... wud be added to Gross Total Income in CASE 1, 2nd Step in order to find the GTI adjusted against Basic exemption Limit. [in case 2 it wudn't make a difference even if its added]
my reason for not adding it is - Winnings are taxed @ 30% flat rate irrespective of GTI, therefore it must not be added

CORRECT ME IF IAM WRONG...

Mithreshan (Articled Trainee) (60 Points)
Replied 26 October 2009

Why no posts after my reply, maybe is it toooooo long to read & reply. well here's my TRY on simplifying it:

Winnings from Lottery wud be taxable @ 30% flat rate (as posted already by Mangesh)
LTCG for first 2 cases wud be taxabe @ 20% after deducting available BASIC LIMIT(150000, 225000 respectively). Available basic limit would be Basic Limit (-) 130000 (-) 70000 [Chapter VI A Dedn.]. For the 3rd case LTCG wud be wholly taxable @ 20% without any ded. from it
The 'other' income [i.e.income other than Winning..., LTCG] in all 3 cases wud be less than the BASIC LIMIT, therefore income taxable @ normal rates wud be NIL.

and my doubt again posted here 4 those who haven't read the above.

my doubt is whether Winning.... wud be added to Gross Total Income in CASE 1, 2nd Step in order to find the GTI adjusted against Basic exemption Limit. [in case 2 it wudn't make a difference even if its added]