Tax Queries

Hi Friends,

I have two questions:-

Q.1 - My father has earned income of Rs. 2,40,000 in accounting year 2007-08 as short term capital gain from trading in shares in the stock market.
Whether such income is speculative? What will be his tax liability as he is a senior citizen. He has paid Life Insurance Premium of Rs. 30,000 in
2007-08.

Q.2 - My father wants to create his HUF.  Unfortunately my grandparents (both my father's and mother's parents) and my father's bother are not
alive. From whom he can get gift for his HUF. Is there any other way of creating HUF without receiving any gift?

Replies (2)

First Query :-

If regulary traded in share and transactions of purchase and sale of securities are so frequent then the income is business Income. 

If traded in derivative segment [Futures & options], then income from such segment is business income only and not speculative.

If traded in company's shares segment, then it is speculative business, if settlements are otherwise than by actual delivery of securities.

Total Income  - 2,40,000

Less : Inv. U/s.80C - 30000

Taxable Income - 210000

Tax on above - 3000 [Senior Citizen Basic Exemption Limit - 1.95 Lakhs]

If no other Income, then you can claim rebate U/s.88E of STT paid from Rs.3K tax liability

If there is any other income, then first calculate average tax rate, next tax on income from speculative business and rebate U/s.88E.

 

Sec 4

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