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I am 58, and my net taxable income, after deduction of Chapter VI-A, is exactly ₹5 lakh; plus, long term capital gain on sale of mutual funds is around ₹95,000 and short-term capital gain on sale of equity shares is ₹45,000.
As I came to know that capital gain is taxed separately, am I eligible to get tax rebate of ₹12,500 on my taxable income of ₹5 lakh? Thereby, my final tax liability is only on LTCG, and STCG subject to available exemptions under Capital Gain.
S. Gayathri
Based on the details provided above, I assume that you are covered under the old tax regime as you have claimed deductions under chapter VI-A.
Pursuant to the recent Budget amendment, long-term capital gains on sale of mutual funds up to ₹1.25 lakh is exempt from tax. Hence, your long-term capital gains of ₹95,000 is not taxable.
Short-term capital gain on sale of equity shares is taxable at the rate of 20 per cent if sold on or after July 23, 2024.
Accordingly, your total income is ₹545,000, consisting of other income and short-term capital gains.
As your total income is in excess of ₹5 lakh, you will not be eligible for rebate of ₹12,500 as provided in section 87A.
Your total tax liability will be ₹22,360 on account of the following:
5 per cent tax on income exceeding ₹250,000 i.e. ₹12,500 20 per cent tax on short-term capital gains of ₹45,000 i.e. ₹9,000
Tax – ₹21,500
Cess @ 4 per cent - ₹860
Total tax liability – ₹22,360
The writer is Partner, Deloitte India
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