Tax Calculation on different gains in share trading

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

24 December 2010 Please suggest optimum tax calculation (AY 2008-2009) for an individual based on following information:

1. LTCG on shares (with STT benefit) - Rs. 1200.00

2. LTCG on shares (without STT benefit) - Rs. 306000.00

3. STCG on shares (with STT benefit) - Rs. 12600.00

4. Short Term Capital Loss on shares (without STT benefit) - Rs. 1250.00

5. Gross business loss in share trading - Rs. 92000.00

6. Total expenses incurred on above-stated transactions - Rs. 62000.00

7. Other income - Rs. 89500.00

8. Contribution to 80C - Rs. 100000.00

Thanks in advance.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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24 December 2010 1 Exempt U/s 10(38)
2. Chargeable With Indeaxation 20%, Widout 10%
3. Taxable u/s 111A @10%
4.Normal Provisions Tax Rate
5. Which Business Loss if Speculation , If Loss in F&O Then Non Speculation
6.If Under PGBP Shown Then All Allowable & If CG Shown Then STT is Not Allowed to deduct & Remaining Allowed as per Sec 14A i.e Rule 8DD
7.Normal Provisions
8. Deductible Under Chapter VIA 1Lacs

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Querist : Anonymous

Querist : Anonymous (Querist)

24 December 2010 Hi, thanks for response. The business loss is non-speculation. The expenses are hard to determine what relates to capital gains and what relates to business. The expenses do not include STT.

The query also wants to calculate what should be the ultimate tax liability for the assessee considering these are different sources of income. How can these incomes be mixed and matched to gain optimum tax liability?

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CA. R. B. SAH

CA. R. B. SAH (Expert)
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25 December 2010 TOTAL TAX PAYABLE IS Rs.21,100.
In your case deduction u/s 80C shall not be allowed.

Assumption- LTCG on share(without STT)is on listed shares.

Non- speculation business loss can be set-off against capital gain.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2010 Mr. Sah thanks for your response. You are right that 80C cannot be availed and securities are listed ones only.
Please explain how you arrived at tax liability? Will basic exemption of Rs. 110000.00 be allowed during such computation?

CA. R. B. SAH

CA. R. B. SAH (Expert)
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25 December 2010 LTCG(STT) Rs.1200 exempt.

Computation of tax liability

Basic exemption 110000(89500+20500from LTCG withot STT)

Tax on LTCG(WITHOUT STT)= 306000-20500-92000=193500*10%=19350

Tax on STCG 12600-1250=11350*10%=1135

Total Tax=19350+1135=20485
cess=20485*3%=615

Total=21100

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Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2010 Mr. Sah many thanks for clear cut computation, but I think you have not accounted for expenses incurred. Do you think it will be not allowed?

CA. R. B. SAH

CA. R. B. SAH (Expert)
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26 December 2010 I have assumed that expenses have already considered while calculating capital gain and business loss.

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Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2010 The expenses have been mentioned separately and not accounted for in either business loss or capital gains yet.

Considering that expenses should be allowed, I assume capital gains will reduce by that much amount, i.e., capital gains will become Rs. 131500.00 and applicable tax will be 13150.00 plus cess. Is that the correct assumption?