Speculation income

Law :

Intra-day trading is the trading of shares within the same day. Generally, delivery is not taken in case of intra-day trading, and thus, these are said to be speculative transactions. As per Section 43(5) of the Income Tax Act, 1961, the said transactions shall be considered as speculation business transactions and the income therefrom would be either speculation gains or speculation losses.

Points to be noted

i).As per Section 43(5) of the Income Tax Act, 1961, Intra-day trading shall be considered as speculation business transactions and the income therefrom would be either speculation gains or speculation losses. 

ii).Income from speculation gains is taxed at the normal rates.

iii).Speculation losses can be set off only against speculation gains and not against any other head of income or non-speculation business income. 

iv).Short-term capital loss can be set off only against income from short/long-term capital gains.

v).Non-speculation business loss can be set off against the Long Term or Short Term Capital Gains made during the said year.

Query: 

Suppose, Mr.A trades in shares and income from share trading is only his income. He normally buys and sells on the same day without taking delivery or takes delivery and sells the shares afterwards but before one year.

Q 1). What will be the nature of income from this two types of  transactions?

Ans:  Income tax act distinguish between delivary and intraday

i).Intraday trading income is purely a speculated income (same as lottery or betting on horse race) ii).Delivary is an investment therefore capital gain rules will apply

Q 2).What is the tax implication and tax rate for both types?

As per the  taxation point, the income from speculation gains is taxed at the normal rates. Your tax liability would thus depend upon your net taxable income. If the income is treated as non-speculation business income/short-term capital gain(Delivary Trading) (Securities Transaction Tax not paid), the taxation is at normal rates. However, if the same is treated as a short-term capital gain and the STT is paid, the tax is chargeable at specified rate, plus education cess /higher education cess as applicable. 

Q 3).If loss can it be carried forward in both cases?

Ans:  As per the provisions of income tax act 1961

Speculation losses can be set off only against speculation gains and not against any other head of income or non-speculation business income.

carried forward up to 4 years only

Non-speculation business loss (Normal Business Loss) can also be set off against the Long Term or Short Term Capital Gains made during the said year.

Short-term capital loss can be set off only against income from capital gains, whether long term or short term.

Non-speculation business loss cannot be set off against salary income.

Carried forward up to 8 years

Q 4).Is tax audit there if turnover exceeds 1 crore. Because only the difference between sale and purchase value is debited or credited to day trading account. in this case what to do.?

Ans:

The 1 crore turnover is not calculated on your purchase and sale of shares. it has been derived from your profits and losses 

In case of your trading in FNOU even though your urnover is lesser than 1 crore you have to audit your books through CA

tax audit is required if turnover exceeds 100L 

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Sale of House Property And its Tax Implications

Law:

As per Income tax act 1961 Long-term capital gain arising from sale of a capital asset is exempt under Section 54/54F if invested in purchase or construction of a house property, subject to certain conditions.

To get the captain gains exemption

i).The assesse needs to purchase the new residential house within a period of one year before or two years after transfer of the original house.

ii).For under-construction properties, the construction needs to be completed within three years from the date of transfer of the original house.

It has now been clarified by Finance minister Arun Jaitley that the investment for getting capital gains benefit should be made in one residential house property situated in India, not abroad. This amendment will apply in relation to the assessment year 2015-16 and subsequent years.

QUERY:

1).Is it possible to use property sale amount to clear of the primary mortage in US, with out calling for any         tax implication?

Ans: As per income tax act it is clearly stated that Capital gain from sale of house property. has to re-invest in house property only to claim exemption.

2).How this transaction affects my capital gain tax or any other tax?

Ans: This sale of house property is capital gain.

As per Income tax act  rules, long-term capital gains on sale of a property held for three years, attracts 20 per cent tax. Advance tax also liable to pay on such capital gain. Exemptions are granted under certain conditions.

3).Do NRI/PIO/OCI have to file return in India for their property rental income  and Capital Gains Tax?

Ans: The Government of India has granted general permission for NRI/PIO/OCI to buy property in India and they do not have to pay any taxes even while acquiring property in India. However, taxes have to be paid if they are selling this property. Rental income earned is taxable in India, and they will have to obtain a PAN and file return of income if they have rented this property. On sale of the property, the profit on sale shall be subject to sec 9 capital gains. If they have held the property for less than or equal to 3 years after taking actual possession then the gains would be short term capital gains, which are to be included in their total income as tax as per the normal slab rates shall be payable and if the property has been held for more then 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess.

4).How does the Double Taxation Avoidance Agreement work in the context of tax on income and Capital Gains tax paid in India by NRI?

Ans:  India has DTAA’s with several countries which give a favorable tax treatment in respect of certain heads of income. However, in case of sale of immovable property, the DTAA with most countries provide that the capital gains will be taxed in the country where the immovable property is situated. Hence, the non-resident will be subject to tax in India on the capital gains which arise on the sale of immovable property in India. Letting of immovable property in India would be taxed in India under most tax treaties in view of the fact that the property is situated in India.

5).How does Double Taxation Avoidance Agreement work in the context of CGT paid in India on the foreign tax treatment?

Ans: In case the non-resident pays any tax on capital gains arising in India, he would normally be able to obtain a tax credit in respect of the taxes paid in India in the home country, because the income in India would also be included in the country of tax residence. The amount of the tax credit as also the basis of computing the tax credit that can be claimed are specified in the respective country’s DTAA and is also dependent on the laws of the home country where the tax payer is a tax resident

Repatriation of funds :

Q1. What are the rules governing the repatriation of the proceeds of sale of immovable properties by NRI/PIO as prescribed by the Reserve Bank of India?

(a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR(B) account, the amount to be repatriated should not exceed the amount paid for the property:

      (i)In foreign exchange received through normal banking channel or 

   (ii) By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account.Repatriation of sale proceeds of residential property purchased by NRI’s/PIO’s out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI’s/PIO’s may repatriate an account up to USD one million, per financial year,

(b) If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account.

Are there any exceptions? 

Yes, there are two exceptions: 

(a) If your taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, you do not have to file your tax returns. . 

(b) If you earned long term capital gains from the sale of equity shares or equity mutual funds, you do not have to pay any tax and therefore you do not have to include that in your tax return

Tip: You may also file a tax return if you have to claim a refund. This may happen where the tax deducted at source is more than the actual tax liability. Suppose your taxable income for the year was below but the bank deducted tax at source on your interest amount, youcan claim a refund by filing your tax return. 

Another instance is when you have a capital loss that can be set-off against capital gains. Tax may have been deducted at source on the capital gains, but you can set-off (or carry forward) capital loss against the gain and lower your actual tax liability. In such cases, you would need to file a tax return

Q2).What’s the best way to file tax returns?

Ans. Traditionally, you could file your return either by giving a power of attorney to someone in India or by sending your form and documents to a tax expert in India who would then file returns on your behalf.

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DEDUCTIONS OF INCOME TAX ACT 1961

Contents

• Sec 10(13A) - House Rent Allowance.
• Sec 80D – Medical Insurance.
• Sec 80DD – Medical treatment of Handicapped dependents.
• Sec 80E – Interest on Education Loan.
• Sec 80U – Deduction in case of Disability-Self.
• Sec 24 – Housing loan interest. 
• Sec 80EE – Deduction in respect of interest on loan taken for residential house property.
• Sec 80CCC – Pension Policy.
• Sec 80TTA – Interest on Saving Bank account.
• Sec 10 – Leave Travel Allowance.
• Sec 80C 

Sec 10(13A) – House Rent Allowance.

• Least of following is Exempt from Tax :
•  Actual HRA Received
• Actual rent paid over and above 10% of Salary*
•  40% or 50% of the Salary* (50% for who are living in Mumbai, Delhi, Chennai, Kolkata.)

* Here Salary means =  Basic + DA (Dearness Allowance)+Commission

•   PAN of the Landlord is Mandatory when payment of rent is exceeds Rs.1,00,000 p.a. 
•  The person who is paying rent without HRA, he can claim deduction u/s 80GG.
•  Deduction will not be available one who living in own house.

Sec 80D – Medical Insurance.

•  It is applicable to Individual and HUF.
•  Rs.15,000/- on payment made on Himself, Spouse and Children is exempted.
•  Rs. 15,000/- on payment made on Parent or Parents of employee is exempted.
•  Rs.20,000/- if Senior Citizen.
•  Mode of Payment is any mode other than Cash.
•  Preventive Health check-up is restricted to Rs.5000/- [cash payment allowed here]

Sec 80DD and 80U 

• Applicable to Individual (R) and HUF(80DD). 
• Dependents means Spouse, children, parents, brother and sister.
•  40% disability = Rs.50,000/-
•  80% disability = Rs.1,00,000/-

Sec 80E – Interest on Education Loan.

• Applicable only for Individual.
• Purpose of the Loan should be for Higher Education(H E means after passing Senior Secondary Examination).
• Loan should be taken from Financial Institution or any approved Charitable Institution.
• Deduction allowed in which employee starts paying interest and immediately succeeding Seven Financial Year.
• This loan can be taken for Himself, Spouse, Children, Student for whom Legal Guardian.

Sec 24(b) – Housing Loan Interest.

• Purpose – Purchase, Construction, Repair, Renewal or Reconstruction.
• Rs.2,00,000/- ,  Incase acquisition or construction is completed within 3 years(SOP).
• The Loan should be taken on or after 1.4.1999.
• For other purpose(repairs, renewal, reconstruction) = Rs.30,000/-.
• For let out property no Maximum Limit.

Sec 80EE – Deduction in respect of interest on loan taken for residential house property (w.e.f 01-04-2014).

• Applicable to Individual for residential house.
• Deduction limit up to Rs.1,00,000/-.
• Loan taken from Financial Institution, sanctioned during the period 01-04-2013 to 31-03-2014.
• Loan amount should not exceed Rs.25 lakhs. 
• Acquisition value does not exceed Rs.40 lakhs.
•  Assessee does not own any residential houseproperty on the date of sanction of the loan.

Sec 80CCC – Pension Policy.

• Applicable to only Individuals. 
• Maximum deduction is Rs.1,50,000/- along with the sec 80CCD and 80C.
• The amount of Deposit is out of his income chargeable to tax.
• No deduction allowed u/s 80C if claimed under this section.

Sec 80TTA – Interest on Saving Bank account.

• Applicable to Individual and HUF.
• Interest from Saving account (not being time deposits).
• Deduction up to Rs.10,000/-.
• SB maintained in – a. Bank,

                                         b. Co-operative Society,

                                         c. Post office.

Sec 10(5) – Leave Travel Allowance.

• Applicable to both Resident and Non-resident of India. 
• Any place within India.
• Rule 2B
• Restriction on children - Two children of individual born after 01.10.1998.

Sec 80C

• Contribution to Provident Fund.
• Life Insurance Premium.
• Home loan Principal Repayment.
• National Saving Certificate.
• Pension Fund.
• Fixed Deposit (5Years).
• Senior Citizen Saving Scheme.
• 5 Years Post Office Time Deposit. 

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Trouble shooting guide for problems in accessing Income Tax efiling website

SOLUTION FOR ACCESSING www.incometaxindiaefiling.gov.in 

WITHOUT ANY PROBLEMS OR 404 NOT FOUND ERRORS 

WHILE TAX AUDIT 


Since ICAI was reported of the difficulties being faced while uploading the income tax returns in the e-filing website, the matter was taken up with appropriate authorities. The authorities have shared a Trouble Shooting guide for problems in accessing the www.incometaxindiaefiling.gov.in

FOLLOW BELOW STEPS
1. INTERNET SERVICE FROM ISP IS NOT AVAILABLE OR FAILING IMMEDIATELY 

SOL: The call centre of ISP need to be contacted for resolving this issue 

2. INTERNET CONNECTION IS WORKING PROPERLY AND OTHER WEBSITES ARE OPENING PROPERLY 

SOL: CHECK YOUR WINDOWS HOSTS FILE 

I). GO TO MY COMPUTER 

C:\WINDOWS\SYSTEM32\DRIVERS\ETC\HOSTS



OR FOLLOW BELOW TUTORIAL

NEXT

NEXT

NEXT

NEXT

AND ENSURE THE NOTE PAD CONTAINED THE 
DATA SHOWN BELOW 

DON'T EDIT ANYTHING THING IN THE FILE IT LEADS TO DAMAGE YOUR SYSTEM

Make sure there’s no entry in the hosts file that maps the website’s URL (incometaxindiaefiling.gov.in) to localhost or 127.0.0.1 or an incorrect IP address – it is a possibility if you have imported some third-party hosts file or it’s modified by some malicious software installed in the computer

2. Clear DNS Cache and use Public DNS

The DNS cache keeps a record of sites that you have recently visited on your computer. If that gets corrupted, you may have issues opening sites that were previously accessible without problems including incometaxindiaefiling.gov.in. Type cmd /k ipconfig /displaydns in the Run window to see the cache entries. If that unreachable website is listed in the cache, type cmd /k ipconfig /flushdns to clear the cache. Change the DNS of the network connection which you are using in your local PC. You can do this by editing the properties of the internet connection. Two most recommended DNS’ are Google DNS (e.g. 8.8.8.8, 8.8.4.4, 4.2.2.2) and open DNS.

TO CHANGE DNS PLEASE FOLLOW BELOW INSTRUCTIONS

1.

NEXT

Suspend the Anti-Virus and Firewall – If you are running an external software firewall or anti-virus program (like Norton, ZoneAlarm, etc), exit and restart the web browser.

Restart the internet connection.

ISSUE 3.

HOWEVER ABLE TO OPEN WEBSITE AND NOT ABLE TO ATTACHE XML FILE OR USE DIGITAL SIGNATURE

SOL: Use the instructions mentioned in Help  Browser Settings in incometaxindiaefiling.gov.in website to check that the browser being used is the recommended one. Verify the current configuration of the browser being used and modify if needed.

FOR XML - CREATE A FOLDER NAME AS fakepath in c drive and paste xml file in that folder and select from there while uploading 

PROBLEM WITH DIGITAL SIGNATURE AFFIX--- PLS SEE OUR PREVIOUS POST

SOURCE: ICAI.ORG REPRESENTED OF STUDENTS AND CA'S CONVENIENCE TO SOLVE PROBLEM QUICKLY  

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NEW FORM 3CD IN EXCEL FORMAT

NOTIFICATION

INCOME-TAX

S.O. 1902 (E) In exercise of the powers conferred by section 295 read with section 44AB of the  Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

(1) These rules may be called the Income-tax ( 7th Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

In the Income-tax Rules, 1962, in Appendix-II, for Form No. 3CA, Form No. 3CB and Form No. 3CD, the following forms shall be substituted, namely:-

please find the Tax Audit Form 3CD in excel format in below link

http://www.mediafire.com/view/aub3fsxt037ctry/FORM_3CD_NEW_FORMAT_.xlsx

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NOT ABLE TO UPLOAD DIGITAL SIGNATURE IN INCOME TAX WEBSITE HERE IS THE SOLUTION

If you are not able to attach digital signature (pfx/USB) getting error by java. Follow the Steps to resolve it

1.Open control panel > change the view of control panel from category > small icons

2.Search Java or Java (32-bit).

3.Select Security tab in Java 32-bit Reduce the Security Level From High to Medium

4.click OK

5.Now Restart Your web Browser(i.e, IE or chrome)

6.Even Now you getting the problem (STOP SCRIPT LOAD ERROR)

7.In Java window > Security tab > Restore Security prompts > Restart Browser 

8.Now you can Upload DSC 

9.Copy the webpage address where you have to attach digital signature and add to the Exception Site list

10.Refresh the webpage after adding the web address to java panel.

11.Happy Income tax filings 

12.Enjoy. :-)

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