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Subbiah Mathurappan   05 August 2021

Income Tax on Short Term Capital Gains

I am Senior Citizen drawing pension and earning interest on bank deposits and income from house property. My total income after taking into account of all deductions and exemptions cones around ₹375000/- I also earned Short term capital gains of ₹35000/- on sale of equity shares. If I club both the income, it comes around ₹410000/-.I understand that the tax payable on ₹410000/- will be exempted as a tax rebate under section 87A. Please clarify the correct position. If my calculation is wrong please guide me to arrive at the amount of income tax payable. Thanks in advance.

 8 Replies

CMA Poornima Madhava

CMA Poornima Madhava (CMA)     05 August 2021

You are right. Since the taxable amount is <5 lacs, no tax would be payable. But if you have any TDS credits, you are required to file ITR to claim refund of tax.

Subbiah Mathurappan

Subbiah Mathurappan   05 August 2021

Thanks for the prompt clarification Madam.
Samantha J

Samantha J   05 August 2021

If you have made short term capital gains, tax will be payable on it alone. You will pay STCG @ 15%
aditya sood

aditya sood (practice as advocate)     05 August 2021

You have to pay short term capital gain @ 15 % on 35000 rest of your income from pension and saving bank interest was below the taxable limit . you have to pay tax only and only on short term gains. kindly read section 111A of the Income Tax Act 1961.
Samantha J

Samantha J   06 August 2021

When you file returns,the STCG will be taxable.Now since your total income is less than Rs 5 L , rebate of tax payable in STCG will be allowed,thus ultimately you will not pay tax . The difference is that it's "rebate" not "exempt" which means that if your TI is > 5L then no rebate 87A and you pay full tax on STCG !
1 Like
Subbiah Mathurappan

Subbiah Mathurappan   06 August 2021

Thanks for the replies.
aditya sood

aditya sood (practice as advocate)     06 August 2021

I stands corrected if any person income was below taxable limit i.e 5 lakhs and also income from stcg , rebate of under section 87A is applicable reason being short term capital gain is computed with other income for the calculation of tax.
Subbiah Mathurappan

Subbiah Mathurappan   06 August 2021

Thanks Aditya Sir for your confirmation and clarification.

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