You will have to pay the tax on the balance long term capital gains after such set-off. Since the coupon rate is specified for the bonds, you will have to offer the difference as interest for taxation and the same cannot be treated as capital gains at all. Any profit made on the sale of listed security before the completion of 12 months is treated as short-term capital gains.
I have gross long-term capital gains of Rs. 2,45,000/- on equity mutual funds and net taxable long-term capital gains of Rs. 1,45,000/- after deducting an initial one lakh on which no tax is payable for last year. With my other income of Rs. 2,40,000/- my total taxable income becomes Rs. 3,85,000/-. After availing deduction under Section 80C for a PPF contribution of Rs. 1.50 lakh, my taxable income comes to Rs. 2,35,000/ which is below the taxable limit. Do I still have to pay taxes?
Against long-term capital gains on equity mutual funds, you can neither claim rebate u/s 87A nor any deduction under Chapter VIA like 80 C, 80 D, 80 DDB, 80G etc. However, in case your income other than long-term capital gains and short-term capital gains on listed equity shares and equity fund is below the taxable limits, such shortfall can be adjusted against taxable long-term capital gains as well as short-term capital gains of listed shares and equity schemes. You will have to pay the tax on the balance long term capital gains after such set-off.
Since your other income is 2,40,000 and presuming that you are not a senior citizen, you will be able to reduce the long-term capital gains by 10,000 due to shortfall against the basic exemption limit of Rs. 2,50,000/- and pay tax on the balance long term capital gains of Rs. 1,35,000/- under the old tax regime @ 10%.
If you opt for the new tax regime, after adjustment of shortfall of Rs. 60,000/- against the basic exemption limit of Rs. 3 lakhs applicable for the new tax regime, you will have to pay tax on the balance long term capital gains of Rs.85,000/- @ 10%.
I need clarification on tax treatment for the gain from Unlisted Secured Debentures. Where I am getting a fixed coupon rate of interest on maturity (on a cumulative basis). Will the difference be capital gain or will it be taxed as interest income?
Since the coupon rate is specified for the bonds, you will have to offer the difference as interest for taxation and the same cannot be treated as capital gains at all. The benefit of lower long-term capital gains tax can be taken in respect of deep discount bonds where the rate of interest is not specified and only the issue price and the face value is indicated.
Even though the interest is paid at maturity you can offer the same on an accrual basis provided the same is done consistently.
Kindly guide with tax implications on Gold ETF sold within 12 months or after 12-month holdings for an individual after the budget.
Any profit made on the sale of listed security before the completion of 12 months is treated as short-term capital gains. Such capital gains have to be included in your regular income and tax shall be payable at the slab rate applicable to you. In case the units of gold ETF are sold after 12 months the profit made on such sale is treated as long-term capital gains and will be taxed at a flat rate of 12.50% without indexation.
Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.comand @jainbalwant on X formerly known as Twitter. (Views expressed are personal and do not necessarily reflect the official position or policies of the Outlook Media Group.)