I understand that 10 per cent LTCG tax on equity is chargeable when the profit in this category exceeds ₹1 lakh. I sold a few shares that I had held for more than a year. Based on the highest price obtained on January 31, 2018, I have arrived at a gross profit of ₹3,08,500. Do I have to set aside ₹30,850 (10% of the total) as tax payable? Or should I reduce the limiting factor of ₹1 lakh from the ₹3,08,500 and pay 10 per cent on ₹208,500? Please confirm whether the 4 per cent health and education cess is to be paid on ₹3,08,500?
AK Ramdas
As per the amendment made in the Finance Act, 2018, long-term capital gains exceeding ₹1 lakh arising on transfer of listed equity shares shall be taxable at a concessional rate of 10 per cent. Further, surcharge (if any) and health and education cess at 4 per cent shall apply.
You have earned LTCG of ₹3,08,500 in FY2018-19. As the LTCG in excess of ₹1 lakh is taxable, you are liable to pay taxes at 10 per cent on ₹2,08,500 —
If an NRI gives a credit card in his name to a resident Indian to use in India with a limit, is there any tax incidence on the NRI or the resident Indian?
There are no direct provisions under the I-T Act which governs the taxability on the usage of an NRI’s credit card by a resident Indian. However, in case the credit-card payments are made by the NRI on account of the card usage by the resident, it may tantamount to a ‘gift’, and provisions of Section 56 (2)(x) of the I-T Act may apply if such payments exceed ₹50,000. The resident will be then required to pay tax on the same.
However, an exemption is provided if the NRI qualifies to be a relative of the resident Indian as prescribed under the provisions of the I-T Act and subject to conditions.
Subject to the above, there may not be any direct tax implications.
We have restricted our comments to the provisions of the I-T Act. Provision of a credit card by a NRI to a resident Indian may have to be examined from the perspective of FEMA (Foreign Exchange Management Act) and RBI regulations.
The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in