Tax on Short Term Capital Gains from Shares & Eq. MFs

I thank Nikhil for giving the Idea for this article. (Here is the background). How the STCG tax liability ‘ll be decided if the income source for the person in question is only interest + STCG?

If a person has only interest income + Short Term Capital Gain income, First we should check the gross income figure before deciding the tax liability. To understand the concept better, I’m providing the different cases. (Tax slabs are considered for FY 2013-2014). It’s assumed that Securities Transaction Tax is paid for both shares & Eq. MFs to keep the tax calculation simple.

Case – 1 –  age less than 60Y, interest income 125000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 125000+55000 = 180000 which is less than taxable income limit of 200000.

So even after earning 55000 Rs. STCG amount, the tax liability is zero.

Case – 2a –  age less than 60Y, interest income 175000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 175000+55000 = 230000 which is more than taxable income limit of 200000. Now what ‘ll be tax rate here for excess amount of 30000 Rs? it ‘ll be same 15.45% as applicable for STCG from shares or Eq. MFs.

So tax payable = 30000*15.45% = 4635 Rs.

Case – 2b –  age less than 60Y, interest income 175000 Rs. & STCG 55000 Rs. 50000 Rs. nvestment in section 80c.

Here Gross income = 125000 (adjusted for section 80C 50000 Rs. benefit)+55000 = 180000 which is less than taxable income limit of 200000. So even after earning 55000 Rs. STCG amount, the tax liability is zero due to benefit of section 80c on interest income.

Case – 3 –  age more than 60Y, interest income 175000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 175000+55000 = 230000 which is less than taxable income limit of 250000. (applicable for Sr. Citizen)

So even after earning 55000 Rs. STCG amount, the tax liability is zero.

Case – 4a –  age more than 60Y, interest income 225000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 225000+55000 = 280000 which is more than taxable income limit of 250000. Now what ‘ll be tax rate here for excess amount of 30000 Rs? it ‘ll be same 15.45% as applicable for STCG from shares or Eq. MFs.

So tax payable = 30000*15.45% = 4635 Rs.

Case – 4b –  age more than 60Y, interest income 225000 Rs. & STCG 55000 Rs. 50000 Rs. nvestment in section 80c.

Here Gross income = 175000 (adjusted for section 80C 50000 Rs. benefit)+55000 = 230000 which is less than taxable income limit of 250000. So even after earning 55000 Rs. STCG amount, the tax liability is zero due to benefit of section 80c on interest income.

Case – 5 –  age more than 80Y, interest income 375000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 375000+55000 = 430000 which is less than taxable income limit of 500000. (applicable for Very Sr. Citizen)

So even after earning 55000 Rs. STCG amount, the tax liability is zero.

Case – 6a –  age more than 80Y, interest income 475000 Rs. & STCG 55000 Rs. No investment in section 80c.

Here Gross income = 475000+55000 = 530000 which is more than taxable income limit of 500000. Now what ‘ll be tax rate here for excess amount of 30000 Rs? it ‘ll be same 15.45% as applicable for STCG from shares or Eq. MFs.

So tax payable = 30000*15.45% = 4635 Rs.

Case – 6b –  age more than 80Y, interest income 475000 Rs. & STCG 55000 Rs. 50000 Rs. nvestment in section 80c.

Here Gross income = 425000 (adjusted for section 80C 50000 Rs. benefit)+55000 = 480000 which is less than taxable income limit of 500000. So even after earning 55000 Rs. STCG amount, the tax liability is zero due to benefit of section 80c on interest income.

Please feel free to discuss the related issues on the basis of info provided above.

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2 Responses to Tax on Short Term Capital Gains from Shares & Eq. MFs

  1. K.l.gera says:

    Interest income:Rupees 40000, short term capital gain on shares:Rupees 450000. Deduction towards PPF:Rupees 150000.Calculate tax liability for assessment year 2024-2015.Age below 60 years.

    • ashalanshu says:

      Dear Gera, PPF investment can not be claimed against STCG from shares. Yes it ‘ll help out against interest income. So net taxable income ‘ll be 4.5L Rs. Out of which 2.5L Rs. ‘ll be zero tax income and remaining 2L Rs. ‘ll be taxable @ 15.45%.

      Thanks

      Ashal

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