S C Vasudeva
I am a salaried employee and an income taxpayer. I have a small stock portfolio with a value of about Rs 3 lakh, built over a period of several years. Recently, on the suggestion of a friend who is active on the stock market and based upon his advice, I have started trading in futures and options (F&O). The value of the shares is used by the stock-broking firm as the margin money for trading and I have not put in any additional funds. I have being doing 2-4 trades in a week and my net gain after paying securities transaction tax, stamp duty, brokerage, and other statutory levies etc was about Rs 45,000 till the end of March. Most of this gain was used to purchase more shares and I have not withdrawn any money from my demat account. I also intend to hold on to these shares for the long term. The demat account has a cash balance of about Rs 8,400 which I don’t feel the need to withdraw immediately. What is the tax implication for me? If I don’t withdraw the gains made by F&O trading, am I required to pay tax on it even if the amount is re-invested in stocks?
Is the cash balance in a demat account liable for tax?
Is there any rule, provision or time frame under which such gains and cash balance can be exempted from tax?
— nikhil joshi
The amount of Rs 45,000 earned by you from trading in futures and options should be treated as income from business. You are supposed to pay tax on the said income and the same will be a part of your total income. Once the income earned on the trading has been included in the total income, the cash balance cannot be brought to tax. There is no provision whereby such income can be claimed to be exempt from tax.
My estimated interest income for the financial year 2016-17 is Rs 5.10 lakh. As per my understanding, eligible deduction u/s 80C is Rs 1.50 lakh. I have to pay interest of Rs 2 lakh on loans. My estimated tax liability for the year ending March 31, 2017 is nil. My query is whether I can give form 15H to the bank for the current financial year for non-deduction of tax.
— kuldeep kumar
Particulars given by you don’t indicate the purpose for which the amount was borrowed and the interest of Rs 2,00,000 is payable. There being no income under head of “Income from Property”, in all probability, deduction in respect of the interest of Rs 2,00,000 would not be admissible under any of the heads of income. In view thereof, it would not be possible for you to file 15H with the bank for non-deduction of TDS as your total income would not be below taxable limit if the amount of interest is not deducted from the interest income.
One of my friends (say Mr Y) retired as an officer from Govt. of India and is filing his income tax return regularly. Till now he was investing in a five-year fixed deposit for availing benefit under Section 80C. My queries are as under:
Your queries are replied hereunder:
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