I have recently invested small capital in stocks. I am in need for detailed guidance on STCG as I am a short term investor. I have no other sources of Income. Here are my questions. Hope my questions gets resolved. 1) What is the exact step of calculating capital gain i.e what to include/exclude e.g. STT, edu cess, SAH, brokerage etc?
2) As per provisions of 111A if I have STCG of less than 2 lacs and If I don’t have any other sources of income, do I become eligible to pay any taxes on this STCGs ?
3) Suppose, I do make STCG in excess of 2 lacs, say total 3 lacs, then how much tax I should pay ? Is it 15% of 3 lacs or 15 % of 1 lac %(considering exemption upto 2 lacs)
4) Within what time frame I should pay such tax ? Is it next day immediately OR as per Advance Tax calendar which is 1st-15th Sep, 2nd-15th Dec, 3rd-15th Mar.
5) Which challan should I use to pay such tax and in favor of whom?
6) Is ITR-2 is the correct form to file yearly return if I only have income from capital gains ?
7) Suppose, I make a profit of 4 lacs and deposit tax accordingly with the tax dept. But what if subsequently I make a loss of 10 lacs which translates into yearly net loss of -6 lacs (10-4).Won't I be at a loss as well as I have paid advance tax on capital gains that I've lost since then? What should be the next step, either demand a refund or file a return for carry forward losses or both? I feel its not right to pay tax if you haven’t earned anything.
8) Is it allowed to net all gains and losses and pay the tax if any on 31st March only, so question of underpaying or overpaying does not arise?
9) Is there any excel sheet which I can use to tabulate the data on capital gains and keep track of it?
Please bear with me for asking many questions but I can not find a single credible place to resolve the questions as there seems to be many opinions and endless debates on this issue. I am sure many new investors’ faces these questions but unable to depend on any answers. Any help would be extremely appreciate for many small investors.
09 July 2012
1. taxable capital gain shall be calculated as under:
Sale Consideration Less: Expenses on Transfer Less: COst of acquisition Taxable Capital Gain
(a) STT paid shall NOT be reduced from sale price and shall NOT be added to cost of acquisition. (b) Brokerage paid shall be allowed as deduction (reduced from sale price and added to cost)
2 & 3. If the assessee does not have any other income or his income does not exceed the exemption limit, the unutilised exemption limit shall be reduced from the amount of capital gain and tax shall be payable only on the balance amount.
(a) Accordingly, if you have no other income and STCG is less than Rs. 2 laks, no tax is payable. (b) If the STCG exceeds Rs. 2 lakh, then tax shall be payable on (STCG - 2 lakh)
4. Such tax should be paid on or before the next due date of advance tax.
5. You have to pay through Challan No/ITNS 280. You can pay online: https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp
6. Yes, ITR 2 will be filed.
7. First, you dont have to pay 100% of the tax as advance tax. You only have to pay certain %age.
Secondly, on the due date compute your net income, then calculate the tax liability on such net income and pay only the required %age.
If later on you suffer loss, then your net income shall be reduced. Accordingly your tax liability shall be reduced and so shall your advance tax instalment.
If you have still paid excess advance tax, claim refund of the same.
8. If you wait for 31st March and do not pay advance tax, then interest will be levied if there is a net tax liability.
I thank you from the bottom of my heart. My every doubt has been cleared. You have been very kind on replying so promptly. I am sure your answers will help many individual investors.
I thank you once again for your generous help.
P.S. - I see sundry items in my contract notes such as service tax, edu cess, cash turnover charges and stamp charges. Do I treat them same as STT(ignore) or should I add/deduct them while calculating C.gains ?
CAclubindia
