ASK ANIL: Trading in stocks; how to file IT returns?

'When I was a salaried person then it was easy for me to submit income tax return but in share trading I can't understand how to submit income tax return...'

Souvick Das: I had fixed deposit of Rs. 40,000 on 22.11.2016 in DHFL. But before maturity on 22.03.2020 the company has gone under Insolvency and Bankruptcy Code (IBC). In September, 2021 I have only received capital amount of Rs. 15,600.

Is there any provision in income tax for showing this capital loss of fixed deposit? If yes, please let me know.

As per Income Tax, capital gain or loss arises when there is a transfer of capital asset. This transfer includes sale, exchange, relinquishment of assets or extinguishment of rights for a price

Anil Rego: Unfortunately, one cannot claim a capital loss on a fixed deposit. However, if you have invested in a listed NCD, you can claim the capital loss.

Khushroo Amroliwalla: I read your reply to one of the queries whether capital gains can be set off against purchase of property. As you have explained, the exemption/setoff is permitted u/s. 54F. I have a similar query, but my question is:

Can the exemption u/s. 54F, be claimed only on purchase of an ownership flat? Will I be permitted to claim set off u/s. 54F against purchase of rental/tenanted property? There would be a proper agreement with payment of Stamp Duty and Registration fees, etc. Completely legal transaction with full payment by cheque.

Please let me know.

Anil Rego: We assume that the query is regarding self-occupied and let out property. Your question is not clear, so I will answer from both possibilities.

If you are talking about investing in a leasehold ownership flat (eg. A 99 year or 125 year lease): one cannot claiming benefit u/s 54F.

If you are asking about buying a house that is tenanted: Yes, you can claim the benefit as there is no requirement of the property to be self-occupied. This is subject to you fulfilling various conditions u/s 54F.

Sarvotham Salvankar: I was working in a private firm up to March 2021 and got retired. At present I am working in the same firm as an advisor for 1 year. Can I declare my income as Business income or Income from Service provided? Is there any requirement of Service Tax registration? Which ITR form to be used?

Anil Rego: It depends on how the company is compensating you. If it is continuing to pay you salary, and provides you a Form 16, then you need to continue as salaried income.

It is likely that they are having you as a consultant and will give you Form 16A. In such case it will be treated as income from business or profession.

Ananth Narayan: Am an Indian, senior citizen aged 75 years, presently residing in Goa.

I had acquired tenancy rights of a rented room in a residential building in Gr. Mumbai, via an Affidavit made in my favour by my grandmother prior to her demise in whose name was the initial tenancy. There was no investment ever made on this rented tenancy by me or by my grandmother which had been taken under the old 'pagadi' system.

I recently transferred my rights of this rented tenancy, with the consent of the landlord, to a third party for a consideration value of Rs. 20 lacs to be paid to me, as per a registered agreement entered into between us. This amount of Rs. 20 lacs was received by me from the third party by deposit of cheques into my bank account during the current financial year.

So, Sir, I seek your clarification on my income tax liability on this amount of Rs. 20 lacs received during the FY 2021-22.

My source of income is otherwise only from interest on bank accounts/deposits, mutual funds, SCSS, which are falling under the exemption limits.

Would appreciate an early response in clarification enabling me file my ITR for AY 2022-23.

Anil Rego: The pagadi system is one in which the tenancy rights are purchased, and which can be transferred for a price, with the consent of the landlord.

Any money that you receive over and above the cost of the tenancy will be treated as capital gains. Since you mentioned that no money was paid, the whole amount will be treated as capital gains. The laws also allow you to value the same as of the base year 2001 if it was purchased before this date; and you can index this notional purchase value from 2001.

Syed Rahaman: From last financial I am engaged with share trading profession after quitting my job; When I was a salaried person then it was easy for me to submit income tax return but in share trading I couldn't understand how to submit income tax return. In last financial year I made a profit of around 27 lacs as per the below mentioned head, could you please help me for submitting the return?

Long term profit: Rs 5,37,488

Short Term profit: Rs 18,72,324

Speculation: Rs 3,57,009

Dividend Received: Rs 87,450

Anil Rego: As per the income tax laws, gains from sale of equity shares can be either classified as Capital Gains or Business Income depending upon various factors like period of holding and volume of transaction. Hence, if the shares are bought and sold at a relatively higher frequency, it could be taxable as business income and taxed at the normal rate of tax. (Not Capital Gains rate).

Based on the information you have provided; it appears that your income would be treated as business income. You can consult with a Chartered Accountant since this will have a significant impact to you.