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T. Banusekar

I AM a government servant and also invest in shares. In the financial year 2004-05, my taxable salary income was Rs 1,30,000. I also have short-term capital gains worth of Rs 10,000 and long-term capital gains of Rs 20,000. On the capital gains, security transaction tax has been suffered at the time of sale.

If I invest/make payment to PPF, LIC etc., to the extent of Rs 60,000, what would be my tax liability?

Sanjeev

Reply

Since you have stated that the long-term capital gains has suffered securities transaction tax at the time of sale, the same would be exempt from tax. Your salary income can be reduced by the deduction available under Section 80C in respect of the amount invested/paid in PPF, LIC etc. Therefore, the total income other than short-term capital gains would be Rs 70,000. Your short-term capital gains will be Rs 10,000.

Your taxable total income would be Rs 80,000. Since this less than Rs 1,00,000 there will be no tax liability since Section 88D allows a rebate whereby if the income does not exceed Rs 1,00,000 there will be no tax liability to an individual

Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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