How is STCG calculated for Mutual Funds?

,A Garg

As per the provisions of the Income Tax Act, where a unit of an equity oriented mutual fund or Unit Trust of India is held by an individual for 12 months or less, immediately before the date of transfer, any capital arising from the transfer The profit unit is treated as short-term capital gain/loss (STCG/L). Further, where a unit of the Mutual Fund is held by an individual for 36 months or less, immediately preceding the date of transfer, any capital gain arising from the transfer of the unit shall be treated as STCG/L. goes. STCG/L is calculated as the difference between net sales return (actual sales return minus brokerage and contingencies) and cost of acquisition (COA).

In case of transfer of specified securities (including mutual funds), where the dates of purchase and sale of specific shares cannot be correlated, the cost of acquisition and holding period shall be calculated on the basis of the circulars of the Department issued in this regard. The first-in-first-out (FIFO) method should be used for the purpose of computing capital gains.

Further, in the case of securities held in dematerialized form, it has been specified under section 45(2A) of the Act that the cost of acquisition and the period of holding of such securities shall be determined on the basis of FIFO. Accordingly, in the event of transfer, the cost of acquisition and holding period of such unit should be calculated on FIFO basis for the purpose of computing capital gains, i.e. we are selling the oldest units first.

I am a government employee and am entitled to rent. I took a flat on lease for a monthly rent of 20,000 in the financial year 2020-21. I started paying the rent as per the terms and conditions. Although the rent of my residence was fixed by the competent authority after about 13 months. Now my office is transferred 234,000 to the landlord for 13 months rent after deducting 10% of the rent as TDS. My office informed that for all monthly payments, 10% will be deducted as TDS. I am paying rent directly to the landlord’s bank account. Is the deduction valid?

,Joseph Rajesh

It is assumed that you are not subject to tax audit in India. Further, we understand from your question that the lease agreement is between you and the landlord for the accommodation for which you started paying rent in FY 2020-21.

If you have to pay rent directly to the landlord, then as per the provisions of section 194-IB of the Income Tax Act, 1961, you need to deduct income tax at the rate of 5%, only if the rent is more 50,000 per month, as per the prescribed procedures. Therefore, in such a case, tax deduction at source should not be applicable, as the amount of rent is less than 50,000 per month. Ordinarily, where a non-individual assessee is liable to pay rent to a resident, the payee is liable to deduct income-tax at the rate of 10%, as per the provisions of section 194-I of the IT Act, 1961. Is required. The time of credit/payment of such rent to the payee. However, no deduction is required under this section where the amount of such income is likely to be credited or credited or paid, during the financial year, to the payee, during the financial year, does not exceed 240,000.

Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG in India.