Dear Sir, I had sold shares exactly after one year i.e. date of purchase 9.10.2008 and date of sale 9.10.2009. Capital gain earned on this is short term or long term? I am a NRI and my bank has deducted TDS on this capital gain stating that it is a short term gain and I should have hold the shares atleast for one more day. Your guidance shall be highly appreciated. Regards - Haresh Bilakhia
A careful reading of the term `short term capital asset` in the definitions Section 2 of the Income Tax Act, 1961 confirms the stand taken by your Bank. The wording used is `more than 12 months`. This means that you should have held the asset in question at least for 12 months and 1 day.
Mr. Ashalanshu, Please re check and confirm whether what I have stated here is correct or not!
Dear Mr. Subasu, in my case I had purchased shares on 9.10.2008 and hence, 12 months got completed on 8.10.2009. As I sold shares on 9.10.2009 I have sold shares after a period of 12 months(howsoever small the excess period may be). I shall appreciate further opinions.Regards - Haresh Bilakhia
Dear Subasu/Bilakhia, I`m not at all agree with the view taken by ur Bank. Sample this -
Purchase date - 9 oct 2008
12 months completes on - 8 oct 2009 (by the midnight of 8th oct 2009 i.e. 12AM for 9 oct 2009)
since the holding periods exceeds the 12 months period (no matter the period is few days or few Hrs.), in my opinion ut Gains r LTCG & as the STT was paid, u r eligible for Tax free LTCG.
Bank is not right to ask for completion of 1 more day to be eligible for tax free LTCG.
If I extend your argument further, the shares could not have been purchased before the market opens on 9th Oct 2008. That makes it 09.55 hrs. So, one year would be completed only at 09.55 hrs. on 9.10.2009. In effect, the purchase could have been effected anywhere between 09.55 and 15.30 hrs. on 9.10.2008.
Therefore, another view could be that more than 12 months means at least one day beyond 12 months.
Please have a fresh look. I am also having the matter referred to someone knowledgeable in the Income Tax Department.
You would be in possession of both the contract notes for purchase and sale. Please make a comparison of the time given on the Contract Notes and see whether 12 months period has been technically completed. i.e. If bought at 10.30 hrs. of 9.10.2008 and sold at 10.31 hrs. of 9.10.2009, then, you can present your case that one year has been completed.
Dear Bharesh,
I agree with what dear Ashal has pointed out and you will have to write to the bank and demand to rectify this anomaly. Banks and also MF registrars are known to make mistakes and then to cover up their mistakes, they will come up with some excuse or other.
Regards,
Wadia
Dear friend, I don`t know the reason why u r purchasing the new flat in ur wife`s name?
But from Taxation point of view, Sample this -
1. The capital gains from the sell of old house r liable to tax in ur hand & as u r not purchasing the new house in ur name, u w`d have to pay tax on this capital gain.
2. As u r using ur own money to purchase the flat in ur wife`s name, due to clubbing provisions of Section 64 of Income Tax, any rental income from new flat `ll be fully taxable in ur hands.
The reply given by the Department is in line with my reply to Mr. Bilakhia. You will have to prove it with the help of both contract notes that 12 months have indeed been completed.
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