Income Tax - Salary income and short term capital gains

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OldSchool

None

50 Points Joined July 2010

Hello friends,

I worked with a private company till June 2009 after which I joined a college for further education. My salary for the 3 months (April 2009-June 2009) was less than 1 lakh, on which I will not have to pay any tax, as far as I know.

Now, in the period April 2009-March 2010, I also sold off some stocks from my portfolio to pay the fees of my own education. Short term capital gains are about Rs. 40,000; rest being long term capital gains.

1. How do I treat these gains, shall I club them with 1 lakh and not pay any tax, as it will still fall under the 1,60,000 bracket. Or, I will have to treat the short term capital gains differently and pay tax @ 15% of STCG. Moreover, the methodology I used to calculate STCG is that I simply subtracted the inflow (selling the stocks) with the outflow (buying the stocks) where the period of having kept the stocks in my demat was less than 1 year. Is that correct? Or, do I need to factor in some inflation chart or something as well?

2. I have not paid any tax for FY 2009-2010. If any tax is applicable in my case, how I pay it now, and which form do I need to fill to file the return.

3. During this year, I have paid my education fees which came from the Short Term Capital Gains and other savings, do I get any exemption in tax?

4. I had taken the Medical expenses as Taxable from the company, when I worked for those 3 months. In the later months, I incurred some expenses on medical treatment. Do I get any exemption/relief in tax because of the same?

Thank you very much.

Replies (9)

Guest

dear friend

u are not lible to pay any tax according to ur information of salary and capital gain.so don't worry

regards

tarun rustagi

OldSchool

None

50 Points Joined July 2010

Thanks. I am relieved again. I had asked this on another forum and people were of mixed opinion. Some members said that Short Term Capital Gains are to be treated differerently and tax @ 15% need to be paid on them, no matter how less the salary was and some said no tax is payable.

I have one more question. I am paying fees for my education right now and will take up the job next year. Can I get any tax exemption on the fees that I pay during these 2 years of full-time education next year (FY 2011-2012)?

Guest

dear friend

a individual and huf can claim exemption limit in case of stcg or stcg.tution fees paid for education can be claimed as deduction u/s 80C.

OldSchool

None

50 Points Joined July 2010

Originally posted by : tarun rustagi
	dear friend a individual and huf can claim exemption limit in case of stcg or stcg.tution fees paid for education can be claimed as deduction u/s 80C.

Thanks a lot Tarun. Good to know that I would not have to pay tax on the STCG.

Regarding the deduction of tuition fee paid for education, if I have paid the fee in 2009-2010 and 2010-2011, will I be able to claim the deduction in 2011-2012? Because I am a student of 2 year full-time master degree right now.

Thank you very much Tarun. You have been of great help.

OldSchool

None

50 Points Joined July 2010

On enquiring from other people, they are telling me that tax needs to be paid on STCG no matter how much the salary was during the period?

Guest

I think as regards to the method of calculation of capital gains.. As per my knowledge u must use FIFO method, that is the share u bought first was sold first and weighted average cost of the lot will be subtracted from the sales proceeds.

As regards, the short term capital gains, if Gross Total Income before allowing any deductions under Chapter VIA is below 160000 u need not worry as far as my knowledge goes..pl confirm..

OldSchool

None

50 Points Joined July 2010

Revati, thanks for the reply.

Yes, I have calculated the capital gains using FIFO. However, I did not use any Cost inflation index or anything. Please correct me if I calculated the capital gains incorrectly.

Can someone please confirm whether STCG can be considered under Gross Total Income and thus the effective tax is NIL. Or, do I need to pay tax @ 15% on STCG, although my salary income was less than Rs. 1,00,000 for 2009-2010 and the STCG being Rs. 40,000.

Also, regarding the fees I am paying for my full time master degree now (2009-2010 and 2010-2011). Will I be able to claim any deduction on this now (if tax is payable) or in the future once I get back to job?

Guest

dear friend

u can not claim deduction u/s 80C that was wrongly submitted by me.the deduction is available if u are paying fees for ur childerens.

but this is sure that u are not liable to pay any tax whether on stcg or normal income.for salary income u can claim deduction u/s 80C if u have any other investment like insurance premium.for stcg income u can only claim exemption limit benefit.

because ur total income including stcg is less than rs.160000 u will have no need to pay tax as per my knowledge.i submit here under the section refrence.plz check it

section 111A-in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of 15%.

regards

tarun rustagi

OldSchool

None

50 Points Joined July 2010

Great thanks, Tarun. Thanks a lot for all your help. I am relieved to know that I am not liable to pay any tax for this year.

But if the deduction is applicable for children's education and not for self, it is utterly blasphemous. Infact people should be encouraged to self-finance their higher education by giving such deductions.