I had purchased 50 shares of ‘X’ at 100 on March 1, 2025 for the long term. To reduce my tax liability in respect of short-term capital gains (STCG) earned on my other equity transactions during the year, I plan to sell these 50 shares at 80 before March 31, 2026 and buy the same 50 shares of ‘X’ at the same price of Rs 80 the same day. Since the demat account is the same and the shares may not actually leave my demat account (owing to net off), will I be eligible to use this short-term capital loss (STCL) to adjust against my STCG of the current year?
Any transaction which is squared off without actual delivery is treated as speculative business transaction under income tax laws. Any loss from speculative transactions can only be set off against speculative profits only.
In case the same can not be set off during the same year, it has to be carried forward for set-off in four subsequent years against profits of speculative nature. Since the sale and purchase transaction of the shares of X will happen on the same day without any actual delivery, the loss shall not be treated as STCL but shall be treated as speculative business loss.
Therefore, you cannot adjust the other STCG of the same year against such speculative loss of shares sold and purchased on the same day which you will have to carry forward if there are no speculative business profits for the same year.
I would like to open a bank fixed deposit (FD) in my name in India from funds which my wife received on the sale of a flat in her name. Can I pay the tax on the interest income through my income tax return (ITR)?
I presume that the money which you will use for opening the fixed deposit will be treated as a gift from her to you. Under the income tax laws there are no tax implications for either the donor or the recipient in respect of gifts from a spouse. So neither you nor your wife will have any tax implication at the time of making the gift.
However, any income which arises to the recipient from such gifts is required to be clubbed with the income of the spouse making the gift. Such clubbing will happen year after year till the relationship subsists and even when the gifted asset gets converted into any other assets. The clubbing is applicable only in respect of the value of the gift made and does not apply to the income which is generated by investing the income already clubbed.
In case you wish to return the same to her, the same will be treated as loan. I would advise you to pay interest on money borrowed from her to avoid clubbing provisions under Section 60 of the Income-tax Act, 1961 which applies when income is transferred without transferring an asset.
I am holding a flexi account with my bank, I would like to know whether the interest earned on the flexi account is to be shown in the savings account interest or as FD interest?
Some banks offer the savings accountholder the facility of switch in/switch out where the balance over a pre-specified threshold is converted into a fixed deposit and earns a higher rate of interest. This FD amount gets credited to the saving bank account when the balance is insufficient for cheque clearance or withdrawal requests. Such facilities are called flexi accounts in general parlance.
Any interest which gets credited in the saving bank account in respect of such fixed deposits is to be treated as interest on fixed deposit and not interest on saving bank account and accordingly, the deduction under Sections 80TTA and 80TTB can be claimed provided you opt for the old tax regime.
The author is a tax and investment expert and can be reached on 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.)
