Your Taxes

I purchased 300 shares of Hindustan Zinc three days before the record date for payment of dividend. I received the dividend four days after the record date.

I have sold all the 300 shares after three months from the purchase date with a small loss. What are the tax implications for this transaction?

   R Mohanraj

According to Section 94(7) of the Income Tax Act, 1961, if a person incurs any loss on sale of securities that are either bought within three months from the record date or sold within three months from that date, he will not be entitled to carry forward/set off the loss.

However, the restriction would be to the extent of dividend received on the shares sold.

 From the facts, it appears that you have sold the shares within a period three months after the record date (the record date is three days after the date of purchase and the sale has been made after three months from the purchase date). 

Hence, you would not be able to carry forward/set off the loss incurred on sale to the extent of the dividend income. However, the dividend that you have received would be exempt u/s 10(34) of the Act.

One of my relatives turned 80 during April 2016. Till now, she was filing her tax return, as her taxable income (₹3 lakh for FY15-16) exceeded the maximum amount not chargeable to tax.

For FY16-17, her estimated gross income would be about ₹5.4 lakh, and the deductions have been estimated as — Section 80 C - ₹1. 5 lakh; Section 80 D - ₹13,000 and Section 80TTA - ₹10,000.

The taxable income has been estimated as (₹5.4 lakh minus ₹1.73 lakh = ₹3. 67 lakh). In any case, there seems to be no possibility of taxable income exceeding ₹4 lakh in future. 

Considering the above, is it necessary for her to file her tax return in future?

Please note that her income is only from the interest income from instruments such as term deposits made in banks and post office.

Rangaswamy

According to the Income Tax Act, 1961, any person who has attained 80 years of age at any time during a financial year shall be classified as a “very senior citizen” for the entire FY.

Accordingly, the basic exemption limit for your relative would be ₹5 lakh as rightly stated. 

 With respect to tax filing requirement, this would arise when a person’s gross total income exceeds the basic exemption limit. We understand that your relative’s gross total income would exceed the threshold limit applicable to her (₹5 lakh). 

Hence, she would have to file her tax return as long as her gross total income is higher than the basic exemption limit.

The writer is Partner, Deloitte, Haskins and Sells LLP. Send your queries to taxtalk@thehindu.co.in

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