Capital gain tax & income tax filing

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 November 2014 I am an individual who has quit corporate world and started full time trading in stock market.

Now, from last fy, my source of income is from stock market (both long term and short term capital gain), dividend from stocks, Bank SB & FD interest.

I want to know

1) I have filed my Income tax (ITR-2 for fy 13-14) through the java utility for the above mentioned source of income, directly at IT department's website (https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html) which showed nil tax to be paid. Signed physical copy of ITR-V has been sent to the IT department & status of this in the website is still showing as Received (for more than two months). I am becoming anxious whether the IT department will say Java utility provided by IT dept was wrong and I need to cough up tax now. Can/will IT dept ask for tax even though the Java utility showed "nil" tax to be paid?

2) whether the exemption of 2 lakh is still applicable to me.

3) whether the 80C benefit of 1.5 lakh is still applicable to me.

Thanks in advance

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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11 November 2014 u have not shared full details abt ur share activities. Whether u do trading or delivery based transactions. A lot will depend upon nature of transactions

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2014 Shares: 100% delivery.

Futures and Options: 95% are delivery based. Intraday trading only on the last day of the expiry (about 5%).

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CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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11 November 2014 Where shares are held for more than a month, they should be treated as investment and on their sale short-term capital gain should be charged. When shares are held for less than a month, gain on them should be treated as profit from business. See Sugamchand C. Shah v. Asstt. CIT (2010) 37 DTR (Ahd ‘D’-Trib) 345
F&O transactions are no delivery based.
However by virtue of section 43(5) gain/loss arising fm F&O transactions is treated as business income/loss
CA MANOJ GUPTA
JODHPUR
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Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2014 I was under the impression that capital gain is treated either as short term or long term based on less/more than a year. Now this category of business income if shares are held less than a month is new to me. Thanks for this information.

Please clarify the main 3 queries which I have sought out in my first post.

Querist : Anonymous

Querist : Anonymous (Querist)

13 November 2014 Request clarification for my above query from any Expert please.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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18 July 2024 Let's address your questions regarding income tax filing and exemptions:

1. **Tax Calculation and Java Utility:**
- If you filed your income tax return (ITR) using the Java utility provided by the Income Tax Department and it showed nil tax to be paid, it means the utility calculated your tax liability based on the income details you entered. Generally, the utility is reliable, and if it calculated nil tax, it indicates that either your income was below taxable limits or you were able to avail deductions and exemptions to reduce your taxable income to nil.
- The Income Tax Department may review your return during their processing and verification stages. If they find any discrepancies or require further information, they may issue a notice seeking clarification or adjustment. However, as long as your return was filed accurately and all income and deductions were correctly reported, you should not be worried about the Java utility being incorrect.
- The status "Received" on the income tax e-filing portal indicates that your return has been successfully submitted. The final assessment will depend on the Income Tax Department's processing and verification.

2. **Exemption of Rs. 2 lakh:**
- The basic exemption limit of Rs. 2 lakh for individuals (Rs. 2.5 lakh for senior citizens) is applicable for the assessment year relevant to your financial year. For example, for FY 2013-14 (AY 2014-15), the exemption limit for individuals was Rs. 2 lakh.
- This means if your total income (after deductions and exemptions) does not exceed Rs. 2 lakh, you are not liable to pay any income tax.

3. **Section 80C Deduction:**
- The deduction under Section 80C for investments up to Rs. 1.5 lakh is applicable if you have made eligible investments such as in PPF, EPF, life insurance premiums, NSC, tax-saving fixed deposits, etc.
- If you have invested in eligible instruments and the total amount of investments under Section 80C is up to Rs. 1.5 lakh, you can claim this deduction to reduce your taxable income.

### Summary:

- The Java utility provided by the Income Tax Department is generally accurate if you have entered the correct details of your income and deductions.
- As long as your income was below the taxable limit of Rs. 2 lakh (for FY 2013-14), you should not owe any tax.
- You can claim deductions under Section 80C for investments up to Rs. 1.5 lakh to further reduce your taxable income.

If you have already submitted your ITR-V and it shows as "Received" on the portal, there is no need to worry unnecessarily. However, if the Income Tax Department requires any further action from your end, they will communicate it through a notice or intimation on the portal.

It's always advisable to keep a record of all supporting documents and calculations for your income tax return filing to address any queries from the tax authorities efficiently.