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How is long-term capital gain from Nabard bonds taxed?
October, 09th 2018

I am 81 years old and LIC annuities and bank FDs are my only source of income—around Rs 2 lakh per year. In 2018-19, I made long-term capital gains of Rs 6.35 lakh, after indexation, from Nabard bonds. What will be my income tax liability for 2018-19?

Ashok Shah Partner, N.A. Shah Associates replies: Being a super senior citizen, you are liable to pay income tax only if your taxable income exceeds Rs 5 lakh. Longterm capital gains (LTCG), after indexation, from zero-coupon bonds of Nabard are taxable at 20.8% and without indexation they are taxable at 10.40% Therefore, your income in excess of the basic exemption limit—Rs 3.35 lakh—will be taxed at 20.80% and your tax liability works out to be Rs 69,680.

I am a retired central government officer. I have invested Rs 15 lakh in the Senior Citizens’ Savings Scheme (SCSS) in July 2018 for 60 months. Will I get any kind of tax relief?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: Any amount deposited in SCSS is eligible for deduction under Section 80C of the Income-Tax Act, subject to the maximum limit of Rs 1.5 lakh. So, you too can claim a deduction of Rs 1.5 lakh from your taxable income in financial year 2018-19.

I invested in a tax-saving mutual fund in February 2016. Will their be any tax liability on capital gains from this investment when I redeem it in February 2019, after the mandatory lock in?

Rakesh Bhargava Director, Taxmann replies: Earlier long-term capital gains (LTCG) from equity-oriented funds were tax free. But this is no longer the case. Now LTCG in excess of Rs 1 lakh will be taxable at 10% without indexation. So, you will have to pay tax if your capital gains exceed Rs 1 lakh.

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