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Doubt about stcg tax

Pooja (Final CA) (502 Points)

01 August 2012

If my total Income, including short term capital gain is less than maximum amount exempt from tax (i.e< 180000/190000/240000) then am I liable to pay tax on STCG??

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9 Replies

Aman (STUDENT) (47 Points)
Replied 01 August 2012

NO WAY... no tax shall be paid in such case.

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Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 01 August 2012

If your total income including STCG(other than stcg u/s111A arising on sale of shares) is less than Basic Exemption limit then obviously you are not liable to pay tax.

But if your total income includes LTCG or STCG u/s 111A which are taxable at flat rate of 20% or 10% respectively, then the case is something different. In such a case you need to pay Bifurcate your total Income in two parts

Part A-LTCG and/or STCG u/s 111A

Part B-Other Incomes

Part A incomes will be liable to tax @ 20% or 10% or both(if includes LTCG as well as STCG u/s 111A)

Part B income is liable to tax as per slab rate basis.

But there is a concept of marginal relief of capital gains tax , under which if your Toatal Income(other than LTCG and Stcg u/s 111A) is less than Basic Exemption limit then an amount equal to the difference b/w Basic Exemption limit and Total Income (other than LTCG and Stcg u/s 111A) is allowed to be deducted from separately considered STCG u/s 111A or LTCG as a relief for not having much other incomes other than LTCG or STCG u/s 111A.

Hope its clear.

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Pooja (Final CA) (502 Points)
Replied 01 August 2012

Originally posted by : Saurabh
	If your total income including STCG(other than stcg u/s111A arising on sale of shares) is less than Basic Exemption limit then obviously you are not liable to pay tax. But if your total income includes LTCG or STCG u/s 111A which are taxable at flat rate of 20% or 10% respectively, then the case is something different. In such a case you need to pay Bifurcate your total Income in two parts Part A-LTCG and/or STCG u/s 111A Part B-Other Incomes Part A incomes will be liable to tax @ 20% or 10% or both(if includes LTCG as well as STCG u/s 111A) Part B income is liable to tax as per slab rate basis. But there is a concept of marginal relief of capital gains tax , under which if your Toatal Income(other than LTCG and Stcg u/s 111A) is less than Basic Exemption limit then an amount equal to the difference b/w Basic Exemption limit and Total Income (other than LTCG and Stcg u/s 111A) is allowed to be deducted from separately considered STCG u/s 111A or LTCG as a relief for not having much other incomes other than LTCG or STCG u/s 111A. Hope its clear.

So If my total income is 180000 (incld 60000 STCG U/s 111A) then I need to pay tax on 60000 & I get a relief of 70000 [190000 -(180000-60000)] ??

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 01 August 2012

Relief wiil be restricted to the Short term Capital gain u/s 111A.

Pooja (Final CA) (502 Points)
Replied 01 August 2012

Originally posted by : Saurabh
	Relief wiil be restricted to the Short term Capital gain u/s 111A.

u mean Tax on STCG right??

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Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 01 August 2012

No, in your case no tax is required to be paid , because relief of Rs. 70000 is making your STCG as zero ( because relief of Rs. 70000 is to be restricted to Rs. to STCG -60000) ........Since your STCG is zero then obviously no tax.