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Capital gains

navya (STUDENT) (1762 Points)

09 December 2010

WHILE CALCULATING THE TAX LIABILITY OF AN INDIVIDUAL, IF THERE EXISTS INCOME FROM CAPITAL GAINS WHICH IS LONG TERM OR SHORT TERM CAPITAL GAIN THEN THE TAX ON CAPITAL GAIN IS TO BE CALCULATED SEPARATELY WITH THE RATES APPLICABLE FOR THE CONCERNED CAPITAL GAIN, THE SLAB RATES ARE NOT APPLICABLE IN SUCH A CASE AS PER SEC. 111A.

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7 Replies

Rajesh (Articled Clerk) (50 Points)
Replied 09 December 2010

This is applicable only in case of Capital Gains (whether L.T.G. or S.T.G.) on assets as mentioned u/s. 111A & 112 and not otherwise.

One also gets the benefit of unabsorbed basic exemption limit from the gains so computed if the income excluding the gains does not attain the basic exemption limit.

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CA Saba Naaz (Chartered Accountant) (8487 Points)
Replied 09 December 2010

yes......short term capital gain under section 111A will be taxed at special rate , slab rate will not be applicable in this case.

But.. if the total income falls short of the maximum exemption limit , then LTCG or STCG under sec.111A will be shifted to the extent income falls short of maximum exemption limit..and tax will be calculated at special rates on the balance amount of LTCG or STCG under sec.111A.

2 Like

CA Puneet Dham (CA) (694 Points)
Replied 10 December 2010

Sec 111A........ we tax at 15% of capital gains

madhu (auditor) (21 Points)
Replied 21 December 2010

Hi everybody,

What is the Capital gain implications when a father who acquired the immovable property from his HUF as his share during partition before 1/4/1981.

Further, father will gift the property to his only son during 2003.

Son will sell the immovable property in 2005 and will adjust the proceeds towards the property purchased by him during the 2004-2005.

What is the tax implications on the above transaction and for whom ?

with regards,

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 December 2010

Originally posted by : navya
	WHILE CALCULATING THE TAX LIABILITY OF AN INDIVIDUAL, IF THERE EXISTS INCOME FROM CAPITAL GAINS WHICH IS LONG TERM OR SHORT TERM CAPITAL GAIN THEN THE TAX ON CAPITAL GAIN IS TO BE CALCULATED SEPARATELY WITH THE RATES APPLICABLE FOR THE CONCERNED CAPITAL GAIN, THE SLAB RATES ARE NOT APPLICABLE IN SUCH A CASE AS PER SEC. 111A.

yes, slab rates are not applicable, but if the taxable income is below tax limit then the stcg will get added to taxable income 1st and will get taxed @ 15% after deduction of threshold limit.
if the slab rates are above 15% then also the stcg will get taxed @ 15%
in a nutshell, except threshold limit, capital gains are not a regular part of income, and are to be taxed as per capital gain rates.

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 December 2010

Originally posted by : madhu
	Hi everybody, What is the Capital gain implications when a father who acquired the immovable property from his HUF as his share during partition before 1/4/1981. Further, father will gift the property to his only son during 2003. Son will sell the immovable property in 2005 and will adjust the proceeds towards the property purchased by him during the 2004-2005. What is the tax implications on the above transaction and for whom ? with regards, GM

since he used the whole proceeds in new property, so he may qualify for 54 exemption, subject to conditions cited threin.

sandip (student) (32 Points)
Replied 01 March 2011

Hii Madhu.

1. NO capital gain in the hands of HUF because it is exepted u/s 47

2.no capital gain in the hands of father because gift is also exempted u/s 47

3.there is the capital gain in the sale proceed by son subject to section 49 ( previous owner cost taken)and 54( deduction if prop" is residential house prop").

thanks and regards

Sandip Rai