one of my friend incurred loss under the head Business Profession and earned short term capital gain chargeable under the head Capital Gains. All the activities are related to transactions in securities. Is he entitled to adjust the Securities Transaction Tax paid (S.T.T.) paid against the tax liability arising from short term capital gain under the provision of Sec.88 E?
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rebate u/s 88E for the A.Y.2007-08
Replies (3)
Rebate u/s 88E is allowbale only to the extent of income from business or profession arising from taxable securities transcations.
Therefore, if there is a loss under Business or Profession head, rebate of STT is not allowable.
Rebate U/s. 88E is available only if assessee's income includes any income chargeable under the head "Profit and gains in business or profession" arising from taxable securities transaction.
Since there is loss under the head business income, section 88E is not applicable.
Further, STT could not be part of cost of acquisition in case of calculation of Short Term Capital Gain.
No deduction u/s 88E will be allowed. He should set off business losses out of STCG and being STT paid, sec 111A will be applicable and any short term gains after set off of business loss will be taxable @ 15%; if more than Rs. 150000/-; being the lower taxable limit for 20%.
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