Page 18 - Seniorstoday Aug 2024 Issue
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will be determined at the time of sale, but it Company issued shares at a premium
will be the assesse’s choice to:- was amount of the premium is to be
(a) compute the Capital Gain after taking justified to the Income-tax department.
into account indexation and then pay tax at If the Department felt that the premium
20% + surcharge + cess, or was excessive, then they could tax the
(b) in the alternative, to not claim company. This has resulted in a great
indexation and pay tax on the Long Term amount of litigation especially since the
Capital Gain at 12.5% + surcharge + cess. Government has been encouraging start-
In the event that the gain on these assets is ups. Such new companies need to have
a Short Term Capital Gain, then the rate of finance. They would begin on the basis
tax can go up to 30% + surcharge + cess. of an idea and a small amount of capital
In the case of listed securities, indexation and then would raise funds by rounds of
has not been available even in the last financing at a higher and higher premium.
several years and therefore indexation will This was being questioned by the Income-
not be available hereafter. tax Department. Now the “Angel tax” will
The rate of tax on Long Term Capital no longer apply in the future, but the old
Gain on listed securities will be 12.5% litigation will continue.
+ surcharge + cess and for Short Term The Government continues to emphasize
Capital Gain will be 20% + surcharge + the “new regime” of taxation whereby an
cess. assessee will not be able to claim reliefs
These are general guidelines and there which were earlier given for investment
are numerous complicated rules and into PPF or LIC (u/s. 80C of the Income-
provisions and many distinctions in tax Act), the deduction in relation to
different categories and all these must Savings Bank Interest (u/s. 80TTA) and
be checked carefully. So, therefore, any the deduction in respect of Interest on
calculation should be checked carefully Fixed Deposit (u/s. 80 TTB), Donations
and precisely with proper advice taken. to charitable trust u/s. 80G etc. Now the
Image courtesy: Metainvestment have Income from Salary or pension and
Standard Deduction has been raised from
Rs.50,000/- to Rs.75,000 for those who
who opt for the new regime.
The rate of tax under the new regime is as
under:-
Between Rs.3,00,001/- and Rs.7,00,000/-
5%
One example of such a distinction is that On 1st Rs.3,00,000 Nil.
a Non Resident would not get the benefit of Between Rs.7,00,001/- and
indexation. Rs.10,00,000/- 10%
This is clearly not simplification and Between Rs.10,00,001/- and
rationalisation! Rs.12,00,000/- 15%
There have been many other changes. Between Rs.12,00,000/- and
One important one is that “Angel Tax” Rs.15,00,000/- 20%
is being removed. Up to now when a Above Rs. 15 lakhs 30%
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