I am creating a topic to discuss various queries on corporate income tax, dividend tax, capital gains for corporate, tax holidays etc. Believe most of us try to identify value while being in the dark about 10-15% of the company’s expenses that are primarily taxes. A company that makes 25% EBT and paying 30% income tax (30%*25 = 7.5) is spending 10% of its money only on income tax. Then comes DDT, CSR taxes, income tax cess etc.
We need active participation of certified people in this forum (CAs). While I am reasonably aware of rules, I am not certified and not sure of my knowledge on these most times.
My first question is on capital gains on sale of subsidiary. I believe it would be capital gains tax after indexation if the holding is more than 3 years and not corporate income tax rates. Am I right?
Thanks in advance
Please specify if the shares of the subsidiary are sold ( and if yes are they listed or unlisted ) or if the assets of the subsidiary is sold
Thanks for the response.
Lets take cases like Bharti Infratel and IDFC Bank (both listed companies) by the parent Bharti Airtel and IDFC respectively. When Airtel sold 2000 crores last year in the market, what tax would they have paid?
Is it seen as a capital gain with indexation (indexed 20%) or with STT benefits (LTCG - 0%). Can they claim 10% without indexation?
Or is it seen as business income taxed at 30%+ surcharge + cess etc?
Interestingly, I saw a Colgate Palmolive case where the loss of a 100% unlisted subsidiary was argued as a business loss with IT Tribunal. So, what is seen as business income, other income with indexation ?
Does anyone have a good way to compute the STCG and LTCG using FIFO method esp. when purchasing securities in various buy quantities and various buy prices, and doing the same at selling time. I want to make it easy to show it for the Indian taxes.
i am waiting for the same ,can someone help here .can someone please let me know how to file ITR-2 to show profits on short term ans long term gains .
My CA did a whole list of STCG and LTCG transactions but it has to be done using a separate spreadsheet like computation and then pushed upwards. Be careful since it requires the ISIN number etc.
I really thought that they want the details in a specific format provided by ITR-2 (somewhere). Look up some of the queries off the popular taxation sites which is why I had to provide it to my progressive/modern CA. He had to do a lot of computation and reentering of the data and he would not have done it if it was optional. He keeps up with all short cuts and avenues and gets it reconfirmed in many ways with circulars, opinions and also his CA network.
@lakshmikanth I am filing now. Looks straightforward. Just remember Cost of acquisition is “total cost” and not “per share cost”. Easy to miss that and that can cause calculation problems. Otherwise it’s pretty straightforward
Thanks for prompt reply .One more query ,ITR-2 to be filled yearly once right ? .i thought so far ITR-2 need to be filled as part of filing returns at the end of July every year.i am investing for the past three years .except this year i did not see profits last two years .It took three years to get break even and see some green .i died multiple times in case of investing and able to resurrect .
are you done with filing itr-2 ? .is it required to fill yearly once ? right ? can you elaborate if your time permits.it would help others in this forum as well
@lakshmikanth1 Yes. Income taxes are filed once a year and 112A tab(details of stocks bought/sold) has to be filled at that time. No need to enter stocks bought/sold for short term gain/loss.
do you mean to say 112A tab need to be filled for LTCG only which are sold after holding more than a year .
I understand that 112A is relevant for grandfathering in case of LTCG. Wanted to know if there is long term capital loss, then still need to fill 112A for every stock transaction?
Yes. When you fill details, the summarized gain will be autopopulated and you can carry forward loss for future setoff. Other than filling 112A , there is no way to enter summarized gain/loss this year (for stocks where STT is paid).
Yes. Only for LTCG (and LT loss)
PS: I am not a CA. I am stating what I have been informed and what is probably common knowledge and how I have personally filed my returns. Please take advice from your CA , as applicable.
Does Cost of Acquisition in Schedule 112A include brokerage, stamp duty, STT, Service Tax etc. or is it only gross rate per security?
There is a column called “Expenditure incurred wholly and exclusively in connection with such transfer”…where you may account for brokerage charges…STT is not allowed as a deductible expense.
Some tax queries for the time of the year, would appreciate the feedback.
In case someone is in the 30 percent old tax bracket, is dividend taxable at the same rate if I have opted to remain in the old tax regime? From what I remember, there was an exemption till a dividend income of 10 lakhs per year from this tax. I am not sure about this - can anyone help if this exemption till 10 lakhs per year still remains for people under the old tax regime?
Can speculation tax losses be set off against STCG or LTCG?
Can there be any associated costs (for example office rent, electricity bill for office etc) against LTCG or STCG?
I am not sure if this is the right forum to ask this question. But I still thought of asking. I can delete it if it is not relevant
Can we invest in stocks in parent’s account? e.g. can we transfer money into parent account and invest in stocks through their demat acount? I am asking from taxation purpose if it is allowed. I know that gifted money can’t be taken back. But want to know if there is any limit on transfer money to parents and investing through parent account
There is no limit for gift to parents