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I have just started agricultural commodity arbitrage trading for specific short time periods through commodity exchange. At what rate will I have to pay tax for income earned from such trading during FY 2013-14? I am a senior citizen.
— Sudhansu
In case of stock market transactions, whether the income is chargeable as business income or capital gains will depend on the facts and circumstances of each case, taking into consideration factors such
the nature of the transaction, frequency and volume of transactions.
We understand that the transactions have been carried out on MCX which is a recognised stock exchange. Considering that your transactions are frequent in nature and for the purpose of earning short-term profits, the income, most likely, should be taxable as non-speculative business income under the head “Profits and Gains of Business and Profession” at applicable tax slab rates to a senior citizen. According to the Budget proposal for FY 2013-14, the minimum amount not chargeable to tax for resident senior citizen is Rs 2,50,000.
I am a senior citizen earning Rs 2.5 lakh Govt pension annually. My wife, also a senior citizen, is a home maker. We have joint accounts in banks. From these, we made FDs in joint names with my wife as the first holder. As the interest received on bank FDs is taxable, I would like to know whether the entire interest amount will be clubbed to my income or is taxable in my wife’s hand, she being the first holder of FDs.
— Rajendran Nair
In case of fixed deposits opened in joint names all holders are assessable to tax in relation to interest earned on the portion contributed by them individually towards the fixed deposit. Further, the interest will be taxable in the hands of the person who has actually contributed towards the fixed deposit even though the FD is jointly held.
We understand that you have opened certain fixed deposits with your wife in joint name with your wife being the first holder. Further, we assume that the funds were contributed solely out of your funds, since your wife does not earn any income. Therefore, interest earned on such fixed deposits will be taxable in your hands, irrespective of the fact that your wife is the first holder.
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(The author is a practising chartered accountant)
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