Summary of this article
Short-term equity fund gains face 20% tax; long-term gains exceed Rs 1.25 lakh.
You can claim Section 121 deductions for independent children's life insurance premiums.
Gold ETF profits incur slab rates within twelve months, or 12.5% thereafter.
In addition to my salary income, I also have capital gains from equity-oriented mutual funds. How do I calculate my tax liability?
The tax on your salary will be deducted by your employer. In the absence of a break-up of your salary, it is not possible to compute the tax on your salary.
The capital gains on equity-oriented schemes held for 12 months or less will be treated as short-term capital gains and taxed @ flat rate of 20 per cent under section 196. If the same are sold after 12 months, the profits will be treated as long-term capital gains and taxed at a flat rate of 12.50 per cent as per section 198 of the Income Tax Act, 2025. The initial long-term capital gains up to Rs. 1.25 lakh from all listed shares and equity schemes taken together will be taxed at zero rate and thus effectively come tax-free in your hands.
For your additional tax liability in respect of capital gains, you can discharge it yourself by paying advance tax if the total tax liability is more than 10,000/- in a year; otherwise, the same can be paid at the time of filing your ITR as self-assessment tax. Alternatively, you can report this income to your employer, who in turn will deduct additional tax from your salary, taking into account such capital gains as well.
Can I pay and claim a deduction under Section 80 C in my ITR for life insurance premium for my married son who is self-employed?
Section 80C of the Income Tax Act, 1961 was applicable till financial year 2025-2026. The Income Tax Act, 1961 has been replaced by the Income Tax Act, 2025, which has come into operation from the financial year beginning 1st April 2026. Section 121 of the Income Tax Act, 2025, read with Schedule XV, provides for a deduction for life insurance premium paid for yourself, your spouse and your children. The child may be a minor or major, or financially dependent or not. This deduction is available only if you opt for the old tax regime.
So, you will be able to claim the tax benefit under 121 for life insurance premium paid for your son even though he is financially independent, provided you opt for the old tax regime.
What are the tax implications on Gold ETF sold within 12 months or after 12 months of holding for an individual?
Any profit made on sale of a listed security held for 12 months or less is treated as short-term capital gains. Such capital gains in respect of gold ETF have to be included in your regular income and taxed at the slab rate applicable to you. In case the units of gold ETF are sold after 12 months, the profit made on such sale is treated as long-term capital gains and will be taxed at a flat rate of 12.50 per cent without indexation.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
