I suffered a loss from the sale of units of a debt-oriented mutual fund that I had bought 10 months ago. Also, I earned short-term capital gain by selling some shares. Can I set off the loss on sale of MF units against the short-term capital gain on sale of shares?
— Vikram Uppal
As per provisions of the Income Tax Act, a mutual fund unit is treated as short-term capital asset if held for up to 12 months and any loss arising from the transfer of such a capital asset is termed as short-term capital loss. Accordingly, any loss on the transfer of units of a debt-oriented mutual fund (held for 10 months) will be in the nature of a short-term capital loss. The short-term capital loss can be set off against short-term capital gains as per Section 70. Thus, you can set off the short-term capital loss on sale of units of mutual fund against the short-term capital gain on sale of shares.
Do I have to pay tax if I keep my flat unoccupied and stay in a rented house?
— Arun Singh
As per Section 23 of the Income Tax Act, if a person owns more than one house, the annual value of one of the houses of his choice can be considered as nil and that of the other house will be determined as prescribed for the purpose of computation of income from house property. However, in your case, as you own only one house, there will be no tax implications, unless the said property is actually rented out.
I am planning to sell one of
my flats that I built five years ago. What would be the tax implications?
— Ravi Kumar
The transfer of a flat, being a capital asset, is subject to capital gains tax in the hands of the transferor. As the flat has been held by you for more than 36 months, the gain on its transfer will be treated as a long-term capital gain, taxable at the rate of 20% plus applicable surcharge and education cess.
Further, the benefit of indexation will be available. It is to be noted that under Section 50C of the Income Tax Act, if the sale consideration is less than the stamp duty value of the flat, the stamp duty value will be considered as the full value of consideration for the purpose of calculating capital gain.
Reinvestment benefit under Section 54 can also be availed. The Finance Bill 2013 has imposed an obligation on the buyer of an immovable property to deduct tax at the rate of 1% where the total amount of consideration is R50 lakh or more.
I earned some interest income from a post office savings bank account. Can I claim exemption under Section 10(15) as well as deduction under Section 80TTA against such an interest income?
— Harish Malik
Under Section 10(15)(i), any income by the way of interest on a post office savings bank account is exempt from tax to an extent of R3,500 in the case of an individual account and R7,000 in the case of a joint account. Thus, interest income beyond R3,500 or R7,000, whichever applicable, will be taxable and form a part of the gross total income.
Further, while computing
the total income, a deduction up to R10,000 will be available under Section 80TTA of the IT Act. Since both provisions are separate, you can claim the benefit of both the Sections.
n The writer is founder of RSM Astute Consulting Group
n Send your queries at fepersonal firstname.lastname@example.org