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computation of trust

chintan mehta (Chartered Accountant) (445 Points)

21 September 2009

special exemption on long term capital gain tax is applicable for individual i.e. when taxable income exceeds the basic exemption limit because of capital gain then computation is calculated accordingly..

is the same available for a trust?

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7 Replies

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 21 September 2009

Dear Chintan,

The trust shall not be entitled for basic exemption limit i.e. Rs. !,60,000/- for tax calculation where the income earned is in nature of taxable long term capital gains or short term capital gain u/s. 111A.

Thanks

kapil kumar agrawal (Chartered Accountant ) (169 Points)
Replied 22 September 2009

Dear Friend,,,

As per the provision of section 139(4A)...

tax rates of individual shall be applicable on charitable trust... so Basic exemption shall also be available to trust,,,

Nothing specified about ur confusion in law>>

But as per sec 11 (1A) if trust utilise the long term capital gain for specified purposes with in time limit then cap gain shall be exempt ...see the secton

otherwise normal prov related to individual shall be applied...

Thanks>>>

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 22 September 2009

Dear Mr. Kapil,

Section 139 and subsection thereunder is for filing Return of Income and not for rate of tax. Also section 11 is for exemption and that too in case of Charitable/religious trust.

Also, the question is for taxability of income by way of LTCG forming part of taxable income i.e. after considering all the exemptions.

Also you can refer section 112(1)(d) which shall prove your opinion wrong.

Let me know if you have any doubt or correct me in case you find something different.

Thanks

chintan mehta (Chartered Accountant) (445 Points)
Replied 22 September 2009

basic exemption limit is applicable .. thats for sure

but what about capital gains.. ??

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 22 September 2009

Dear Chintan,

It shall not form part of Basic exemption limit and you are require to pay tax on single rupee earning as LTCG.

Refer Section 112(1)(d) (also refer section 112(1)(a) so as to conclude, you will sure make this at your ownself. You are not require to depend on us.

If not able to crystalise, let me know.

Regards