When promoting mutual funds, shares, or actual property, do we have to pay capital features tax if revenue is under the essential exemption restrict? Allow us to discover the fact.
Not too long ago I acquired this touch upon one in every of my weblog posts “Basu, My spouse has no wage revenue, The one supply of revenue is curiosity from FD and LTCG/STCG from redeeming mutual fund models. Ought to we pay LTCG/STCG tax though we don’t have wage revenue?”. Therefore, thought to jot down this submit for readability and could also be useful for others too.
Do we have to pay capital features tax if revenue is under fundamental exemption restrict?
Who could declare the Fundamental Exemption Restrict?
Earlier than continuing additional, allow us to first perceive the eligibility to assert the essential exemption restrict. As per the rule, solely People and HUF are eligible to assert the essential exemption restrict. Even NRIs are usually not allowed to assert the essential exemption restrict.
How a lot is the present fundamental exemption restrict?
As per the FY 2024-25, the essential exemption restrict underneath the outdated tax regime for resident people whose age is under 60 years is Rs.2,50,000, if the age is greater than 60 years however under 60 years, then it’s Rs.3,00,000 and if the age is greater than 80 years, then it’s Rs.5,00,000. Beneath the brand new tax regime, the essential exemption restrict is Rs.3,00,000.
Refer the most recent tax slab charges “July 2024 Price range – New Revenue Tax Slab Charges FY 2024-25“.
Which revenue is first eligible to assert for fundamental exemption restrict?
In accordance with Sec.112 (1) a – Supplied that the place the entire revenue as lowered by such long-term capital features is under the utmost quantity which isn’t chargeable to income-tax, then, such long-term capital features shall be lowered by the quantity by which the entire revenue as so lowered falls wanting the utmost quantity which isn’t chargeable to income-tax and the tax on the stability of such long-term capital features shall be computed on the fee of twenty p.c;
It means you need to first take into account Different Revenue (apart from capital achieve) for availing the essential exemption restrict. After availing of the exemption, you probably have nonetheless room accessible for claiming the essential exemption restrict, then you possibly can take into account the capital achieve to regulate in the direction of the essential exemption restrict. You possibly can’t modify the capital achieve in the direction of the essential exemption restrict as a precedence.
Conclusion – Now it’s clear that to avail capital achieve adjustment in the direction of the essential exemption restrict, you have to be an Particular person or HUF and likewise first have to regulate different revenue (apart from capital achieve). In the event you nonetheless have room to assert the exemption, then solely you possibly can modify it from the capital achieve.
Refer our earlier posts associated to this –
