In May, I sold the shares of four companies. At the market price as of 1 January 2018, I incurred a loss of ₹7,282.80 on them. The haircut was ₹6,133.90. I am a senior citizen with incomes from pension and bank interest. I file income tax returns in the form ITR 1. Is it necessary for me to show the share sale in my ITR? If so, which form should I fill?
—Bimla Kumari
We assume that the shares you sold were of companies listed on recognized stock exchanges in India. As you have held the equity shares for more than 12 months, the gains or losses arising from the sale would be taxable as long-term capital gains or losses (LTCG/L) in your hands. Also, the same is required to be duly reported in your India tax return form. Further, as per provisions of the income tax law, LTCL can be carried forward for eight financial years immediately succeeding the current FY and set off the same against future LTCG. To enable you to carry forward LTCL, you shall be mandatorily required to file your ITR within the prescribed tax filing due date. Based on your income sources, you would need to file your India tax return using Form ITR-2. Further, details of the LTCL will need to be reported under schedule CG in Form ITR-2.
In 2008, I initiated ICICI Prudential Insurance Co.’s Life Stage Pension Policy with an annual contribution for 10 years. The initial lock-in period was 5 years. The policy matured in 2018, but I did not opt to vest the fund amount as I didn’t need the money then. But I do now. Will I need to pay income tax on the fund amount if I vest it now?
—Name withheld on request
As per Section 10(10D)(c) of the Income Tax Act, 1961, the sum received under a life insurance policy (including surrender value) issued after 1 April 2003 but on or before 31 March 2012, and where premium payable for any of the years does not exceed 20% of the capital sum assured, is exempt from tax. In the given case, as the policy was issued in 2008, and if premiums paid did not exceed 20% of the capital sum assured, any lump sum amount you have received upon vesting of the policy shall be tax-exempt. However, if the premiums paid by you exceeded 20% of the capital sum assured, the lump sum received on vesting of the policy shall be taxable.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.
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