Will switching from equity to debt scheme's of the same fund house have tax implications?
ET CONTRIBUTORS|Jul 23, 2018, 06.30 AM IST
Query: Will switching from equity to debt schemes of the same fund house have some tax implication?
Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: Such a switch will be considered as redemption from one fund and fresh purchase in another and will have tax implications. Since you are switching from equity funds, gains within one year will be treated as short-term capital gains (STCG) and will be taxed at 15%. However, if you are switching after one year, gains above Rs 1 lakh will be treated as long-term capital gains (LTCG) and taxed at 10% tax without indexation benefit.
Query: I have two demat accounts. I operate one for transactions done via my stockbroker and another for online trading. If I move shares from one demat account into another, will it invite tax?
Rakesh Bhargava Director, Taxmann replies: As you are the owner of both the demat accounts, moving shares from one account to another doesn’t result in change in ownership. So, there shall be no tax implication as ownership of shares remains with you. It has been settled that no one can earn profit or incur loss from a transaction done with himself.
Query: I am 80 years old and want to sell agricultural land that I bought in 2009 for Rs 8.9 lakh. I am being offered Rs 25 lakh for the plot. Will I have to pay capital gains tax? How can I save tax?
Homi Mistry Partner, Deloitte Haskins & Sells replies: If it is rural agricultural land, it is not a capital asset and hence gains from its sale are not liable to tax. If it is not rural agricultural land, exemption from capital gains can be claimed by investing the gains in new agricultural land. You can also claim exemption by investing the gains in a new house before two years from the date of sale, or by investing in REC, NHAI bonds. If you do not make the aforementioned investments, you will have to pay tax on your capital gains.
Query: I took a home loan to purchase a flat. This flat is registered in my parents’ and my name. Will the rent proceeds from this property be considered as my income or divided into three parts for income tax purposes?
Ashok Shah Partner, N.A. Shah Associates replies: Assuming you have paid for the flat, for income tax purposes, you will be treated as the sole owner of the property and will be have to pay tax on the entire rental income. However, if your parents too have contributed in its purchase, the rent will be considered as paid to all three of you. You can split the rental income into three parts and each of you can show your respective share when filing income tax.