Interest on Loan

This query is : Resolved

Rajesh Somani (Querist)
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21 July 2009 Hi Sir,
I wanted to Know about the Following

Say i have taken the loan of RS 1 Lakh from my father & i have invested that amount in Share market.
I have earned short term capital gain of RS 10 thousand.
I am paying him the interest RS 10 thousand(at 10% interest).
My salary is 1.5 Lakh.
So i wanted to know that am i required to pay any tax on the short term capital gain(as i m paying RS 10 thousand as interest) or i get tax exemption.
Is the short term gain & the interest that is paid on the loan adjustable?

Thanks & Regards
Rajesh Somani

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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21 July 2009 No exemption of interest on loan. You will have to pay tax on Capital gains. And one more thing, your father will have to pay income tax on the interest recieved by him from you, if his income is more then the minimum exemption limit.