Your taxes

My total salary was ₹90,000 in FY2013-14 and my short-term and long-term gains from equity share sales amounted to an additional ₹30,000. My broker company has paid the security transaction tax for my share sales. Would I be liable to pay any income tax?

- Vivek Awasthi

As per the provisions of Indian income tax laws, where the total income of an assessee includes any income chargeable to capital gains arising from the transfer of a short-term capital asset, being an equity share in a company or an equity-oriented fund where such transaction is chargeable to securities transaction tax (STT), then the tax payable by the assessee on such short-term capital gain would be at the rate of 15 per cent (excluding surcharge and education cess).

In the case of a resident assessee, where the total income as reduced by such short-term capital gain is below the maximum amount which is not chargeable to tax (i.e. ₹2,00,000), then such short-term capital gain shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income tax. The tax on the balance capital gain shall be computed at the rate of 15 per cent (excluding surcharge and education cess).

In respect of the long-term capital gain, any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity-oriented fund where the transaction is chargeable to STT, shall be exempt.

To conclude, the capital gain on the sale of a long-term capital asset on which STT is paid shall be exempt from tax and since your other source of income, i.e. short-term capital gain from sale of equity shares (STT paid) and salary, is lower than the maximum amount not chargeable to tax, you are not required to pay any income tax on it for FY2013-14.

I received ₹1,50,000 interest on delayed payment of gratuity in FY2013-14, as the amount was due two years ago itself. Is this taxable income for FY2013-14?

- Vilas Karjini

The Payment of Gratuity Act, 1972, provides for grant of interest on delayed payments of gratuity to an employee. If the employee does not receive his/her gratuity within 30 days from the date on which it becomes payable, he is entitled to get simple interest from the due date to the date of actual payment. As per income tax provisions, income of every kind which is not to be excluded from total income under this Act shall be chargeable to income tax under the head, "Income from other sources", if it is not chargeable to income tax under any of the other four heads of income (i.e. salary income, income from house property, profits and gains of business and profession, or capital gains). In your case, the interest on delayed payment of gratuity will fall under the residuary clause and is taxable in FY2013-14 under the head, “Income from other sources”.

The writer is a practicing chartered accountant. Send your queries to >taxtalk@thehindu.co.in

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