The Hindu Business Line : Taxed housewife

I AM a housewife. I do not have any income other than short-term capital gains from share trading. What will be the tax slabs at which I will be assessable? Am I eligible for tax rebate ?

Shikha Ranjan

Reply

One thing that is not clear from your query is the source for investment in shares. If the source for investment is out of your own funds, the income will be assessed in your hands. If the source for investment has come from your husband, it will attract the clubbing provisions and the income may be assessed in his hands.

You have also mentioned that the gain is from share trading. Whether the income will be assessable as capital gains or as business income will depend on the facts of the case. This will have to be looked at from the factual angle. It is assumed that the trading is in listed securities and that the same has taken place through a recognised stock exchange. If the gain is assessable as short-term gains, tax will be charged at 10 per cent (increased by the appropriate surcharge and additional surcharge).

You can claim the basic exemption before computing such tax. If the gain is assessable as business income, the same will be taxed at the normal rates of tax applicable to an individual. This will apply even if the income is clubbed to your husband.

He may have exhausted the basic exemption from his other income, in which case, if the gain is assessed as short-term capital gains the basic exemption cannot be claimed again, against such income. From the assessment year 2006-07, there will be no rebates. You can, however, claim deduction under Section 80C if the income is assessed as business income. The deduction cannot be claimed if the gain is assessed as short-term capital gains.

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