26 November 2022
which is more tax efficient source of income for people below 60yrs ? mutual funds or bank FD , if this is only source of income ? At what rate income will be taxed : case 1)if Total income from Bank FD is Rs.5 lakh and it is the only source of income ? case 2) If total incme from Equity MF LTCG is Rs.5 lakh and it is the only source of income ? case 3) If total income of Rs.1 Lakh from Equity MF LTCG and 4 Lakh from Equity MF STCG and it is only source of Income. -------------- 1. is Sec 87A tax rebate of Rs.12500 so nil tax for income upto 5 lakh is applicable in which of above case ? 2. if principal amoutn + capital gains are reinvested in mutual fund is there any exemption (as in case of selling one house and buying other house, or captial gain bonds ) 3. which of the above case 80C (ELSS, NPS, PF deposit) deduction can be claimed 4. Upto what extent the income from above source should be restricted, so as to after 80C deductions and 87A rebates tax will be zero . 5. Can we claim 80C and 87A on income from STCG or LTGC from Equity MF ?
26 November 2022
From either source, if income is upto Rs. 5 lakhs, net tax payable after rebate will be almost nil. So, you may invest in any of the source, as per your choice.
27 November 2022
CA Dhirajlal Rambhia this says LTCG on shares mutual funds not eligible for 87A even if it is below 5 lakh limit . https://www.livemint.com/money/ask-mint-money/can-i-avail-tax-rebate-under-section-87a-for-long-term-capital-gains-on-listed-shares-.html
27 November 2022
Question: I am a resident of India. I had acquired some shares more than 20-25 years back when there was no Securities Transaction Tax (STT). I have sold these shares with a profit of Rs. 1,40,000/- on which STT has been paid. How the long term capital gains will be computed in respect of these equity shares? Since my total taxable income including the above long term capital gains after the initial exemption is less than ₹5 lakhs so I feel I do not have to pay any tax in view of the rebate under Section 87A. Please confirm.
Answer: Equity shares of companies listed on the Indian Stock exchange are treated as long term capital assets if the same is sold/transferred after having held for more than one year. Any profits made on transfer of such long term capital asset is called long term capital gains (LTCG). Such LTCG is taxed at a flat rate of 10% after an initial exemption of one lakh every year provided securities transaction tax (STT) has been paid in respect of purchase and sale of such shares. While computing the long term capital gain in respect of listed equity shares, you are not entitled to take the benefit of the Cost Inflation Index. Since the shares were acquired before STT was introduced and since you have already paid STT at the time of sale of these shares, you are covered under Section 112A. In respect of shares that were acquired before 31 st January 2018, the market value of such shares on 31 st January 2018 shall be taken as the cost of such shares and thus any profit accrued till 31 st January 2018 on such shares comes tax-free in your hands. Continued.......
As far as your question of rebate under Section 87A is concerned, you are eligible for a rebate under Section 87A since your total taxable income is less than the threshold limit of 5 lakhs. However, you will have to pay tax at the rate of 10% and less on ₹40,000 (balance LTCG after initial exemption of one lakh).
Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on Twitter.
27 November 2022
Quote... ""CA Dhirajlal Rambhia this says LTCG on shares mutual funds not eligible for 87A even if it is below 5 lakh limit . https://www.livemint.com/money/ask-mint-money/can-i-avail-tax-rebate-under-section-87a-for-long-term-capital-gains-on-listed-shares-.html"" Answer is eligible for rebate.... You have misread it....
27 November 2022
Dhirajlal Rambhi Sir ji your new answer is contradiction your previous answer ====================== From either source, if income is upto Rs. 5 lakhs, net tax payable after rebate is nil. So, you may invest in any of the source, as per your choice. ===================
27 November 2022
Once you apply rebate, tax liability for income upto Rs. 5 lakhs will be reduced by Rs. 12,500- which could be to nil in most of the cases. I don't see any contradiction. It is because of alteration in your query, the answer in LTCG u/s. 112A, & STCG u/s. 111A might differ a bit. But rebate u/s. 87A will be available. THE ANSWER WAS GIVEN TO GENRALLIZED QUERY, BUT AFTER ALTERATION IN THE ORIGINAL QUERY, IT MAY NOT SUIT THE SPECIFIC SITUATION.
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