Taxation On The Short-Term Gains

Short-term capital gains other than on listed shares and equity-oriented schemes are included in your regular income and are taxed at your slab rates, like your other incomes. Short-term capital gains on listed shares and equity-oriented schemes, in respect of which Security Transaction Tax (STT) has been paid, are taxed at a flat rate of 20.80 per cent. For debt funds where 65 per cent or more corpus is invested in debt instruments, the profits are treated as short-term capital gains, irrespective of holding period and taxed at slab rates.

The wholesale consideration received on the sale of property received as alimony on divorce shall not be treated as taxable income. What will be taxable are the capital gains made on the sale of such property. For the purpose of computing the capital gains in the cases where the seller himself or herself has not paid for it, like in the case of gifts, inheritances, the amount paid by the previous owner or owners shall be treated as the cost.

Whether such an asset shall be treated as short-term or long-term will depend on the holding period you and the previous owner have taken together. In case the holding period is 24 months or more, the profits made on it shall be taxed as long-term capital gains. You can claim exemption under Section 54 if you invest the capital gains without indexation for the purchase or construction of another residential house property within the specified period.

Alternatively, you can claim exemption under Section 54EC by investing the unindexed capital gains in Capital Gains bonds of specified financial institutions like Rural Electrification Corporation (REC)or National Highway Authority (NHAI), PFC (Power Finance Corporation), Railway Finance Corporation (RFC), etc.

There is no restriction under the income tax laws as to whom you can pay rent to claim the exemption for HRA. What is required is that you should be paying the rent for the accommodation occupied by you, which is not owned by you.

So even if you pay rent to your father you should be able to claim exemption in respect of HRA received by you within the limits of rule 2A of the income tax rules. To avoid any problem you should regularly pay the rent through banking channels and your father should include the income in his ITR. HRA benefits is available only if you opt for Old Tax Regime.

You can continue to claim the HRA exemption even if you own a house which is let out. An agreement made would be preferable for the payment of the rent to avoid any problem with the income tax department. With respect to the let-out property, the rent you receive will be taxable as per the provisions of the income tax laws.

From the rent received, you will get a flat 30 per cent deduction for repairs, etc., in addition to the interest on the home loan for the year. Under the new tax regime, the claim for interest in respect of let-out property is restricted to the taxable rent. Under the Old Tax Regime, you can claim a set off of loss under the house property head against other income only up to Rs. 2 lakhs every year, and the unabsorbed loss is carried forward for set off in subsequent years against house property income.