Fire your tax related queries and i would get it solved!!!

[diosys]

Dear diosys,
Thank you for giving such analytical replies. your service is greatly appreciated.

I have Question:
I am an NRI and my Mom has residential account in India and she has demat and online trading account also(3in 1) I am sending money to my NRE account and from there I am transfering to her residential bank account and then she trades from her account.

My mom is a retired person and she gets only pension as income. Now I have given her lot of money from my NRE account for her stock trading and investing. In future I am going to get the money from her when I return back to India.

Now how would be the tax charged for her? and how much tax I have to pay when I get it from her back to my residential or NRO account, the profit and money? Most of her trading money is from my NRE account. Naturally I will get from her back. Please advise me what is the best way to avoid taxes.

Thank you in advance
sincerly
sam

Dear Sam,

As per my understanding of the Income tax act you need not to worry for the tax implications once this money comes back to you....Why I say so is because the tax would be paid by your mother on the income she earned by dealing in stocks.....Once she transfers that money to you it would be a simple gift and no income tax would be payable on such transaction....

 

[diosys]

Hello Diosys,


Pls clarify how to maintain the books of account and is there any format for the same? Is it not enough to take a printout provided by the broker for the trades done in a accounting year and submit ?

Also pls clarify what is meant by tax audit ?

My understanding is that it is the calculation of the tax incidence for the trades done by an assessee in an accounting year duly verified by the Chartered accountant. so if one assessee crosses the turnover limit of 40 lacs in an accounting year he cant submit returns on his own but submit it with the chapa from an auditor. Is my understanding right?

John

Dear John....

Let me answer you one by one....

1.)There is no format for maintenance of books....Only certain minimum books of accounts are needed to be maintained...Cash book, ledger and day book plus the relevant supporting...No simple prints from the broker would not suffice...I would urge to hire a part time accountant to draw up your books....

2.) Tax audit means obtaining a report of Chartered Accountant on Form 3CA stating that he has conducted your audit.....Your understanding of tax audit is absolutely wrong....It has nothing to do with the return filing...

 

[diosys]

Let me thank you for replying to my queries concerning tax matters earlier. I have a query though it is not concerning stocks but it relates to cash.

The company that I am working does not have a bank account where our branch is located and is now planning to issue bearer cheques in my name, for which I might be required to show my identity proof at the time of withdrawal. Though this money will be used for the purpose of petty cash for company expenses, Normally an expense of Rs.240,000/- is there every month, please let me know the following:

1. What are the tax implications if Income Tax knows about this bearer cheque in my name.
2. Should I take a letter from the Company stating that the bearer cheque though issued in my name is meant for company petty cash use.
3. Is it legal.

Please suggest and thanks in advance.
Regards,

Dear Hometypist

Dont worry there is nothing here that would hurt you......These sort of transactions are correct from Income tax point of view...

Nevertheless to be on the most safe side the option of getting a letter from the company is not a bad idea....

 

[diosys]

Hi diosys

My equity/share trading sales turnover (not profit) is above 40 lakhs. Overall short term profit from stock trading is 80000, profit from day trading is around 7000 and derivatives loss is 4000. is my account subject to tax audit?? I am having business of mfg.

Well, what is criteria for tax audit for stock trading? my maximum transaction comprises of short term gain.

regards

anurag

Dear Anurag....

Please note that if you declare your income under the head of Capital gains then you are not required to get your accounts audited....

So please answer the head under which you wish to file your return....

As per my understanding and seeing your volume of transaction i am inclined to say that it should go in Business Income....

 

[diosys]

Hi Diosys,

My wife is having a share trading account. At present, my wife's profit from trading is more than 145000 from the stock. Please let me know:

1. What is the income tax limit for women.
2. Does she have to pay Short Term Capital Gain Tax and what is the rules regarding it.
3. My wife is not working and the profit from stock is the only income she has.
4. If my wife invests in ELSS, Insurance for our kids, etc, can we avail any tax benefits.

I request tax experts to please advise me.

Regards,
Benson

Limit - Rs. 1.45 Lacs
She would be required to pay STCG on her income above 1.45 L
She can invest in the tax saving funds to save money....Go for Principal Personal Tax Saver...

The form is attached....

 

[sam1233]

Dear Sam,

As per my understanding of the Income tax act you need not to worry for the tax implications once this money comes back to you....Why I say so is because the tax would be paid by your mother on the income she earned by dealing in stocks.....Once she transfers that money to you it would be a simple gift and no income tax would be payable on such transaction....

Thank you Diosys.. you rock as usual!!!!

You deserve appreciation and reps.... I appreciate your time...

 

[koolfriend4u]

Dear Sam,

As per my understanding of the Income tax act you need not to worry for the tax implications once this money comes back to you....Why I say so is because the tax would be paid by your mother on the income she earned by dealing in stocks.....Once she transfers that money to you it would be a simple gift and no income tax would be payable on such transaction....

If you are giving money to ur parents / life partner as gift, will it be considered for tax deduction ?



I hav read tht u can get exemption for that, if thr any cud anyone tell under which section we can claim that ? wats the procedure ?

thanks

-koolfriend4u

 

[su203]

Dear Su,

As per my limited knowledge the said section is still very much there and read as follows

(iiia) In relation to the financial asset allotted to the assessee without any payment and on the basis of holding of any other financial asset, shall be taken to be nil in the case of such assessee;

Please ask your Chartered Accountant to give the details of the amendment made as if there is such an amendment then the same can have deep implications....

Please ask him to provide the amendment and revert back to me so that if i am wrong then atleast i can rectify my knowledge....

I will try to get the full details as soon as my Chartered Accountant returns from vacation. Actually she had referred me to a website of Income tax department wherein they had provided ITR2 form in a PDF format where you can fill the same on line and take a print out. This was given at the fag end of the instructions for filling up the form. This amendment was made in 2005 if I remember correctly. In fact I did read what I have mentioned in their website. I cannot remember the web address but hope you could find this out. I am also searching for this info and will post as soon as I find it.

 

[kuriako]

Dear Kuriako....

Your intraday regular trading might take you to be taxed in business income head.....There is no limit which would determine whether you fall in business income or in Capital gain....Just the intention has to be there....

Moresover the losses of Intraday cannot be set off against profits of delivery based buying or selling......BUT vice versa is allowable.

If that is the case, then can we set off the business expenses incurred from the profits we made.(eg:data provider fee, computer cost, traveling expense to broker or internet connection charge)

Thank you for the effort diosys!!!

 

[diosys]

If you are giving money to ur parents / life partner as gift, will it be considered for tax deduction ?



I hav read tht u can get exemption for that, if thr any cud anyone tell under which section we can claim that ? wats the procedure ?

thanks

-koolfriend4u

Dear Koolfriend....

I am sorry that such a transaction would not be allowed as a deduction...What you have read is either wrongly written or you have wrongly understood the same...

You would not be eligible for any such deduction on your income if you gift it to anyone....