Hello. Just wanted to clear some doubts in some scenarios.
Assume my total income is 6.5L. It is only capital gains. Nothing else. I claim ELSS deduction of 1.5L. My taxable income becomes 5L.
So if I choose the old regime, the tax I have to pay is 0? (due to 87A rebate being upto 5 lakhs in old regime)
The only doubt I had is if I can claim both rebate and ELSS exemption, effectively making my income tax free upto 6.5L if I use ELSS under 80C.
Assuming above is true, if my income becomes 6.51 lakh, can I claim 87A rebate?
In this case, even after 80C deductions, my income is 5.01 lakhs. Can I claim rebate even then and pay tax only on 0.01 L ?
My only income is from capital gains. If I compare slab wise, the rate is 5% or 10%. But LTCG is at 10% and STCG is at 15%. What rate do I pay tax at? No other income.
Do LTCG and STCG rates apply only if I cross those rates on the income tax slab first?
Chapter VI-A deductions that include deductions like 80C, 80D etc., are not available in case of capital gains. Hence, you will not be able to claim the ELSS deduction.
Moreover, Rebate u/s 87A is not available on LTCG from equity shares or equity-oriented mutual funds (Section 112A).
A ₹1L exemption is available on LTCG and gains in excess of ₹1L will be taxed at 10%. Moreover, STCG will be taxed at 15%. Basic exemption limit of 2.5L is applicable on both LTCG and STCG.
I read your article on 87A (this). In that only LTCG is mentioned.
So if I pick new regime, and I have salary, FD interest, equity STCG upto 7 lakhs, my tax is 0?
When I input the same into your tax calculator, when my income is below 7 lakhs, it shows tax payable. This amount is being shown when I show large capital gains (like 5L).-
Rebate is related to salary amount, or tax payable? If tax payable is 25k, I can claim rebate as long as it is not LTCG
I think I understood. Tax rebate is when tax payable is 25k. Upto 7 lakhs is applicable only if salary. Since I am having STCG, I reach the 25k tax payable before reaching 7 lakhs income (since STCG is at 15% and salary tax slab is at 5 or 10%).
Will be helpful if you can confirm this understanding @Quicko
Rebate u/s 87A is available on an income of up to 5 lakh rupees under the old regime and up to 7 lakh rupees under the new regime. If your income exceeds the limit, rebate will not be available.
The calculator on your website is not saying the same when I have only STCG of 7 lakhs. Not allowing me to claim rebate even when it is 7 lakh and no LTCG
You are getting a rebate of ₹25,000 (which is the maximum one can claim) and hence, your tax liability becomes ₹35,000 on which the 4% health and education cess is applicable. This brings your total tax liability to ₹36,400.
