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T. Banusekar

IF shares are purchased before October 1, 2004, which is the date on which securities transaction tax came into force, and are sold after this date, will the gain be exempt if it is a long-term gain?

If the taxable income is more than Rs 50,000 but less than Rs 1,00,000, can form 15G be issued to the payer of interest so that tax is not deducted at source on the interest.

If the income other than short-term capital gains from sale of shares, which has suffered securities transaction tax at the time of sale, is less than Rs 1,00,000 but where the income exceeds Rs 1,00,000 after including the short-term capital gains, can a form 15G be issued to the payer of interest so that no tax is deducted at source?

If the total income before including long-term capital gains is less than Rs 1,00,000 but is more than Rs 1,00,000 after including long-term capital gains, can a form 15G be issued to the payer of interest so that tax is not deducted at source?

V. Arunachalam

Reply

The long-term capital gain will be exempt if securities transaction tax has been paid at the time of sale. So long as you have sold the shares after securities transaction tax came into force and the same has been paid at the time of sale, the long-term capital gain will be exempt. The fact that no securities transaction tax was paid at the time of purchase of the shares will not affect the eligibility for exemption in respect of the long-term capital gains.

A form 15G can be issued by the recipient of interest to the payer of such interest for non-deduction of tax at source only if the total income does not exceeds the maximum amount not chargeable to tax, unless the recipient is the senior citizen, in which case it can be issued if there is no tax payable.

Thus the form can be issued only if the total income does not exceed Rs 50,000 in a case where the assessee is not a senior citizen.

In all the instances given by you, since your total income exceeds Rs 50,000, you will not be able to issue a form 15G to the payer of interest so that tax is not deducted at source.

It is assumed that you are not a senior citizen. You may note that under Section 197 of the Act, you can make an application to the Assessing Officer who is empowered to issue a certificate for lower or nil deduction of tax at source.

You may also note that for the assessment year 2006-07, the basic exemption is proposed to be increased to Rs 1,00,000, which means that you can issue the form 15G so long as your total income does not exceed Rs 1,00,000.

Mail your queries to taxtalk@thehindu.co.in or by post to Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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