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 FAQS Relating To Education Cess And Sequrities Transaction Tax
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11. If the total income of a non-resident comprises only of short-term capital gains, which is less than the maximum amount not chargeable to tax, how the tax liability will be computed?
Ans. Even if the short term capital gains earned by a non-resident as above, is less than the maximum amount not chargeable to tax, such non resident has to pay tax at the rates applicable on the total amount of short term capital gains. He cannot claim the benefit of the basic exemption limit of Rs. 50,000/-.
12. Can deductions under Chapter VI-A of the Indian Income-tax Law be claimed from the short term capital gains connected to STT?
Ans. No, the deductions under Chapter VI-A are not available against the short term capital gains connected to STT.
13. Can rebate u/s 88 be allowed against the tax payable on short-term capital gains connected to STT?
Ans. No, the rebate u/s 88 is not allowed against the tax payable in respect of short-term capital gains connected to STT.
14. Can an investor claim credit for the STT paid by him on taxable securities transaction?
Ans. No credit can be claimed by an investor for STT paid by him on taxable securities transaction.
15. Is any rebate available on the STT paid by an assessee?
Ans. Rebate on STT is available to assessee, whose income from the taxable securities transaction is charged to tax as a business income. However, such rebate can be claimed only if the following conditions are satisfied:
(a) the rebate can be claimed only against the tax computed on the income from the taxable securities transaction;
(b) the evidence of payment of STT should be attached with the Return of Income;
(c) the deduction allowable will be maximum to the extent of tax on such income.
16. How will maximum limit for the rebate mentioned above be computed?
Ans. The average rate of income tax has to be computed. Then such average rate has to be applied on the income from taxable securities transaction. This can be better understood with the following example:
Say,
Total Taxable Income = Rs. 7,50,000/-
Income from taxable securities transaction = Rs. 2,50,000/- (included in Rs. 7,50,000/-)
Tax on the basis of slab rates = Rs. 1,99,000/-
Therefore, Average tax rate = Rs. 1,99,000 x 100 / 7,5,0000 = 26.53%
Hence, maximum rebate available = Rs. 2,50,000/- x 26.53% = Rs. 66,325/-
Thus, the rebate available will be the actual STT paid or Rs. 66,325/- whichever is less.
FAQS RELATING TO HOUSE PROPERTY INCOME:
17. Is a Non Resident eligible to claim benefit of deduction in respect of interest paid by him on loans taken for the construction/purchase of House Property?
Ans. When the income from House Property is chargeable to tax in the hands of the Non-Resident, he can claim a deduction from this income, in respect of interest payable on any capital borrowed by him for the purposes of acquiring, constructing, repairing, reconstructing of any property. There is no specific restriction regarding the residential status of the assessee, a Non-Resident can also claim this deduction.
18. What is the maximum amount of deduction allowable in respect of interest payable on such loans? Ans. The amount of deduction allowable for interest on loan borrowed for construction/purchase of House Property is Rs. 30,000/-. However, if the interest is paid on any loan in the period from 01/04/1999 to 31/3/2002 and the construction is completed with 3 years from the end of financial year in which such loan is taken, the maximum amount deductible will be Rs. 1,50,000/-.
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