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'Dividends and long-term capital gains are exempt from tax'
January, 19th 2010

I have invested in POMIS with a terminal maturity payment of additional 5% of the invested amount. What would be the tax treatment on the monthly income and the additional amount on maturity?
SK Banerjee

The monthly interest and additional 5% amount will be taxed as per your tax slab.

I am a senior citizen and my I-T exemption limit is Rs 2.4 lakh. Will the dividends received on shares and the LTCG on shares be included in my taxable income?
BL Bhagchandaney

Dividends and long-term capital gains are exempt from tax and hence, would not be included for determining the tax exemption limit. If your other income is below tax exemption limit of Rs 2.40 lakh, then statutorily you dont have to file your tax return.

I would like to trade in forex and index derivatives products overseas. Are there any restrictions on the turnover? What will be the tax treatment?
Anil Waghmare

Kindly refer to relevant foreign exchange regulations if you are permitted to remit money for the aforementioned purposes. The income would be considered as speculative business income and would be taxed as per your applicable slab rate.

I am an executor to my fathers will. We are four legatees would not be dividing the properties because of litigations. What are the tax implications?
Pravesh Panjabi

There is no tax implication on inheritance of property. Capital gains would arise when the inherited property is sold. While computing such gains the cost of acquisition of asset sold would be taken as cost to the previous owner. If the previous owner purchased the property prior to April 1, 1981, then the cost of acquisition would be considered as higher of the cost to the previous owner and fair market value of such property on April 1, 1981.

I am a retired senior citizen. Investments in FDs, MFs and post office savings fetch an annual amount of Rs 90,000. I invest in shares, too. Will I have to pay tax of 15% on equity gains or club all the sources of income?

If you are a resident of India, you have to pay tax at 10% on the amount of total taxable income exceeding Rs 2,40,000. The assumption is your other taxable income comprising interest is less than Rs 2.4 lakh and you have earned short-term capital gains from sale of shares. Under section 111A of the I-T Act, 1961, tax rate on short-term capital gains arising on sale of shares in Indian listed companies is 15%. However, this rate is reduced to 10% if assessees other taxable income is lesser than basic exemption limit.

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