TRANSFER OF SHARES FROM ONE DEMAT ACCOUNT TO OTHER- WHETHER ANY INCOME TAX IMPLICATION?

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INCOME TAX IMPLICATION

Query 1]

Sir, I am Central Government Employee. In the financial year 2009-10, in the month February-10, Income tax was deducted (through TDS) on my full year salary. However, in the month of March-2010, I purchased house for Rs 15 Lacs. Out of Rs. 15 Lacs, I have availed a bank loan of Rs. 13 Lacs. For purchase of house, I had paid Rs. 82,500/- as a stamp duty & Rs. 15,000/- as registration fees. Now my queries are

  1. Can I get income tax rebate on stamp duty & registration fees?

  2. If yes, how much rebate can I claim?

  3. How can I claim refund of income tax paid as a T.D.S by my employer? [vg2977@yahoo.co.in]

Opinion:

  1. Yes, you can get deduction towards stamp duty and registration charges paid for purchase of house.
  2. The deduction towards registration expenses & stamp duty for purchase of house is available u/s 80C of the Income Tax Act-1961. The maximum amount of deduction admissible u/s 80C is Rs. 1 Lacs. It may be noted that the investment in LIC/ PFF/ NSC etc is also covered in section 80C. The total deduction u/s 80C cannot exceed Rs. 1 Lacs.
  3. Though above deduction is not considered while issuing Form No. 16 to you or while working out the T.D.S in your case, the same can be claimed at the time of filing income tax return. You should claim the above deduction in the income tax return to be filed by you for the F.Y. 2009-10.

Query 2]

I am a salaried Govt. Servant paying tax in 30% slab. Excluding salary income, I earned profit/interest in FY 09-10 as below: –

  1. Bank interest from F.D. Rs. 7,000/-

  2. Interest on Tax saving Bonds – Rs. 1,200/-

  3. Short term capital gain from share Investment – Rs. 22,000/-

What will be my tax liability towards above 3 sources separately? I have not filed return since Form 16 is not received from employer.

[sskorpade@gmail.com]

Opinion:

  1. Your income from bank FDR & on Tax saving bonds of Rs. 8,200/- will be taxable straightway @ 30% since your salary income is in 30% tax bracket.
  2. Short term capital gain (STCG) in your case is appearing to be a capital gain income & accordingly will be taxable @ 15% u/s 111A of the Income Tax Act-1961.
  3. In addition to the basic rate of tax mentioned in (1) & (2) above, education cess @ 2% & secondary & higher education cess @ 1% shall further be payable.
 

Query 3]

I was maintaining two Demat accounts so far. But now I have opened a new Demat account with a third DP and transferred all my shares in the two earlier Demat accounts to this third new Demat account. Now I feel the need of the following clarifications for accounting & tax purposes:

  1. As the transfers have been made in the nature of paper transfers, no sale or purchase of share has taken place. Then what will be the value of shares at the time of credit into the new Demat account? Will it not be the same as earlier at the time of acquisition into the old Demat accounts?
  2. What will be the date of acquisition of the shares to be shown in the new Demat account after their transfer into it? This will be relevant to arrive at the long/short term capital gains at the time of sale of the shares from the new Demat account.
  3. If the date of transfer of shares into the new Demat account is to be reckoned as the new date of acquisition of shares, what happens to the period of holding the shares in the old Demat accounts and how the entries will be made in the long/short term capital gains account?
  4. I presume that since I continued to be the holder of the shares from the date of original acquisition till the date I sell the same in the share market, I should be entitled to the benefit of full period of holding the shares in my name, irrespective of the Demat account in which these are held. If this presumption is correct, how will the accounting entries be made in respect of purchase and sale of shares in their life-cycle of holding in my name? 

 Kindly give your esteemed opinion and guidance on the points raised by me. [k_kumar39@hotmail.com]

Opinion:

  1. The transfer of shares from one Demat account to another Demat account neither effect the cost of acquisition/purchase, nor affect the date of acquisition of those shares.
  2. For the purpose of classification as to short term / long term, the original date of acquisition of shares shall be considered and not the date on which the shares are transferred in the new Demat Account.
  3. Similarly, the capital gain shall be calculated by taking the original cost of acquisition of shares when it was purchased in the old Demat A/c.

Query 4]

Sir, I have lost my PAN Card. I don’t have a Xerox copy of my PAN Card. I am worried over it. Whether I have to get apply for new PAN? If yes, then what will happen to earlier returns filed by me using old PAN? I shall be thankful if you can kindly guide as to the procedure to get new PAN Card? [YK]

Opinion:

  1. You can get the new PAN Card with the same number.
  2. For this, you have to make an application in “Request for New PAN Card or/and Changes or Correction in PAN data”. The form can be downloaded from the websites of UTI Technology Services Ltd (UTITSL), National Securities Depository Ltd (NSDL), or the I-T department [www.utitsl.co.in, www.tin-nsdl.com or incometaxindia.gov.in]. If there is no change in the PAN Data, do not tick in the any of the boxes on the left margin of the form. Attach color stamp-sized photograph.
  3. The form can be submitted at PAN application centers of UTITSL and NSDL, the addresses of which are available at the above mentioned website.
  4. In case you don’t have the Permanent account Number, you can retrieve the number of the lost card from the link https://incometaxindiaefiling.gov.in/portal/knowpan.do wherein you only need to fill your full name & the date of birth to get your lost card number.
  5. As a precautionary measure & to avoid possible misuse of the PAN Card, ensure to file the FIR for loss of PAN Card in the police station.

INCOME TAX IMPLICATION

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