'Any Exemption In STCG On Equity Sale?'

Do you have income tax-related queries?
Please ask your questions HERE and rediffGURU Mihir Tanna, associate director, S K Patodia and Associates, will answer them.

Anonymous: My parents who jointly own a flat have decided to sell it in coming weeks. We are looking into reinvesting the part of capital gains from this property into another flat on my name as I would also be getting additional home loan for the same.
The amount would be part of down payment for same. The remaining capital gain is also being reinvested in another flat by parents jointly.
Can Parents share the capital gain with child? Will there be Capital Gain tax on the same in this new budget 2024-2025 after Index abolition?

To save tax on capital gain, your parents need to invest gain amount in another property and it cannot be shared with child.

Capital gain tax will change if budget proposal are implemented as rate of tax is reduced from 20% to 12.5% and benefit of indexation will not be available.

BHARAT: Hello Mihir Ji, I would like to confirm whether there is any exemption in STCG on sale of equity shares, like 1.25 lakh (exemption) in LTCG?

There is no exemption in case of STCG like exemption available for LTCG covered in Sec 112A. However, benefit of minimum exemption limit is available.

Kamal: After the LIC (policy table 131) policy matures, the entire amount received is taxable or the additional amount received will be taxable?

Broadly there are two types of Life Insurance Policy (1) ULIP (2) others

[ULIP insurance plan offers the dual benefit of investment to fulfil your long-term goals, and a life cover) and other policies]

1. Policy taken before 1st February 2021:

The amount received on the maturity of your ULIP is free from tax as per section 10(10D) of the Income Tax Act, 1961, if the amount of premium paid is less than 10% of the sum assured you will receive [For the ULIPs that are purchased before April 2012, the rate is 20%].

2. Policy taken on or after 1st February 2021:

After the amendments that were made in the 2021 budget, the returns from your ULIP will be taxed if the premium paid by you in a year exceeds Rs 2.5 lakh. ULIP proceeds will now be charged as a capital gain (whether long-term or short-term will be decided by the tenure).

Payouts from life insurance policies (excluding ULIPs) issued after April 1, 2023, will be taxable if the total annual premium exceeds Rs 5 lakh.

Krishna: Is there two type of dividend? One in which income tax deducted by company before paying dividend another in which dividend receiver pays income tax.

No. An Indian company deducts TDS@10% from dividends distributed to resident shareholders if amount goes above and beyond Rs 5,000.

Anonymous: Does the new LTCG amendments on the immovable property apply if the sale agreement is registered before July 23 but sale registration is planned for post July 23, 2024.

Amendment is applicable for transfer taking place from 23rd July, 2024. Thus in your case, if sale agreement is executed and payment of consideration is done before 23rd July, 2024; amendment may not be applicable.

K: As per new proposals of tax by Finance minister no indexation price will be allowed in LTCG. What about renovation charges incurred?

Cost of Improvement (renovation charges) will continue to be allowed as deduction from sale consideration while calculating capital gain.

• You can ask rediffGURU Mihir Tanna your questions HERE.

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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.