Is dividend available from shares tax-free for investors?
Ss Kamat is 75
years old. In the financial year 2018-19, he earned Rs 6 lakh as dividend from
the shares. Deposits get 12,000 rupees. At the same time, he has a long-term
capital gains of Rs 3,76,000. He has invested 1.5 lakh rupees in PPF. What will
be their tax liability?
Sr. Chartered
Accountant Dilip Lakhani says that Kamat will not have to pay Tax on the
dividends received from the shares. In case of 'income from other sources',
interest will be taxed on deposits.
However, the
government has added a new section 80TTB in income tax law. Accordingly, people
60 years of age or older can claim deduction on interest income up to Rs 50,000
from the deposit.
In this way Kamat
deserves to claim deduction at Rs 12,000. There will be no tax on them in this
case. Long-term capital gains will be included to compute Kamat's total taxable
income.
For this investment
of 1.5 lakhs made in PPF, Kamat will not be eligible for deduction under
Chapter VI-A on this income. They can take advantage of the Basic Exemption
Limit of Rs 3 lakhs. In this way tax on long-term capital gains of Rs 76,000
will be made. With total tax due, it can claim a rebate of Rs 5,000 under
section 87A.
Short Example of A asked question
Surendra sold a
flat jointly purchased in 1991. The sale agreement was signed on March 30,
2019. Its registry happened on April 1, 2019. In March 2019, the buyer has paid
around 80 percent of the amount. This amount was paid before signing on cell
agreement. The remaining money will be paid this month. His question is:
1. What year will
be the long-term capital gains?
2. Since they are
preparing to buy one of their properties. Therefore, to get the benefit under
section 54, he will deposit the amount from the sale in the Capital Gains
Account Scheme. If the gains are made in the financial year 2019-20, they will
have time till 31 July, 2020. They plan to deposit the full amount of capital
gains in their scheme before June 2019. Is it possible to do this?
3. Is it possible
to deposit more than the original capital gains in the Capital Gains scheme?
4. How will the
buyer who deducts the TDS will look at the IT returns of Finance 2018-19?
5. Can this TDS
claim be made on other tax liability for the stated year?
Lakhani says that
the facts given by Surendra have come to understand that the transfer of the
Residential Flat was done on March 31, 2019. In their case, the transfer will
be considered complete in the financial year 2018-19 (Assessment Year 2019-20).
In this way, before the fixed date of filing of returns for assessment year
2019-20, they should deposit the money in the Capital Gains Account Scheme.
Secondly, there is
no maximum investment limit in the Capital Gains Account Scheme. So, if he
wants, he can deposit more than the original capital gains in the scheme.
However, the benefit will be limited to that amount as long-term capital gains.
No additional benefit will be available on the remaining amount.
Capital gains will
be taxed in the assessment year 2019-20. Surendra will be entitled to claim
credit for the TDS that has been purchased by the buyer. On the basis of
payment in the financial year 2018-19, the buyer can deduct up to 80 percent
TDS. Even then he will be entitled to claim the entire TDS. The reason is that
the transfer will be completed in the financial year 2018-19.
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