Personal Finance

Your Taxes

Sudhakar Sethuraman | Updated on August 09, 2020 Published on August 09, 2020

I am a pensioner, a senior citizen with income below ₹5 lakh (after deducting ₹1.5 lakh 80C investments, ₹40,000 standard deduction, ₹50,000 interest and ₹30,000 health insurance premium). I pay no tax. If I have STCG from share-trading, do I have to pay 15 per cent STCG tax or 20 per cent tax (ie, say, my income is ₹4.9 lakh, I incur STCG of ₹ 20,000 and my income totals ₹5.1 lakh).

K Nagarajan

Short-term capital gains (STCG) from sale of equity shares or equity-oriented mutual fund (STT paid) by a resident individual is chargeable to tax at 15 per cent under section 111A of the Income Tax Act. Surcharge (if any) and health and education cess at 4 per cent shall apply.

The basic exemption limit for a senior citizen (a resident individual above 60 years of age but less than 80 years) is ₹3 lakh. Taxes at 5 per cent will be levied for income exceeding ₹3 lakh and up to ₹5 lakh.

Further, a resident individual can claim a rebate of up to ₹12,500 under Section 87A if his total income does not exceed ₹5 lakh.

Your total income (including STCG) will exceed ₹5 lakh. So, you will not be eligible to claim rebate under section 87A. Your income (other than STCG) will be subject to tax at 5 per cent. Income from STCG of ₹20,000 will taxed at 15 per cent.

Your estimated tax liability shall be ₹ 13,000 — on ₹1,90,000 (₹4,90,000 - ₹3,00,000) @ 5% = ₹9,500; on ₹20,000 x 15% = ₹3,000; Total tax = ₹12,500. Including cess at 4 per cent on the tax, the tax liability equals to ₹13,000.

The standard deduction for 2019-20 is ₹50,000, or the amount of salary (pension), whichever is less.

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in

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Published on August 09, 2020
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