Does ELSSS reduce the amount of taxable capital gain?

Yes, irrespective of the nature of the income, if the total income is less than 2.5 lacs, you don’t pay anything, and even anything is cut, it will be refunded after due checks, so you should file everything properly.

And if the income is 3 lacs of STCG, tax should be paid on the 50,000, provided if you don’t have any deductions and exemptions. But if you invest 50,000 in 80C products like ELSS, this will be deducted first from your income of 3 lacs, so your income becomes 2.5 lacs and not tax.

Taxable income is what remaining after all the deductions and exemptions. So total income can be any number from any number of sources, but of this total income, after all the deductions and exemptions, what remains is the taxable income, and depending on the number, a tax slab is applied and taxed, with some cess included.

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You don’t have to pay any tax of 7.5k on this net income of 3L as you will get rebate on this u/s 87A upto 12.5k of tax if income is b/w 2.5lac to 5lac.

Bro you have paid tax in interest due to not paying advanced tax.

why does this article from groww website says that short term capital gains are not exemptd from tax ?

LINK to article

Cuz there is condition written under it:-

Resident individual who are below 60 years of age with an annual income of 2.5 Lakh.

Are exempt from short term capital gain tax.The same is given above @GB26

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Thanks for all the information.

No, let me give breakup. (Following are approximate values)

  • Salary = 0
  • STCG = 2.8L

Total Deemed income under section 115JC = 2.8L

  • Tax payable on total income = 42k
  • Health & Education cess (4%) = 1.5k
  • Interest for default in payment of advance tax =2k
  • Interest for deferment of advance tax = 1k

Total Tax = 45k

Please clarify if I did something wrong ?
because according to above discussion, tax should have been only on 2.8L - 2.5L = 30k.
30 * 15% = 4.5k
cess = 0.2k
interest = 3k (max)
Total tax = 8k (max)

rebate and no tax= no cess. cess is only at tax amount.

can you please clarify what you want to say, it’s difficult to understand what you are trying to say.
Cess in the numbers I have given is already 4% of tax.
So I don’t understand why are you saying:

And I was charged 45k, so I don’t understand why are you saying:

This is what I was charged. This calculation is done by govt website. I just filled in my income.
What happened to not paying tax for initial 2.5L.
Did govt website ignored 2.5L calculation ?
Do I have to specifically mention somewhere that initial 2.5L should not be taxed ?

My interpetation be:-

1...   You should have income from other source.
2...   You're saying you have paid 45k but If your income would be below 5lakh, you should have rebate of 12.5k which you didn't mentioned here.
3...   Your total income including other source income it could be salary, interest, divident, business income that be more than 5lakh.
4...   If income is 5.3lakh you would have paid 46.3k of tax on 2.8lakh of capital gain income (and more income would be more tax).

So you have paid tax, even though your income is less than 2.5 lacs, for FY 2021-2022?

Can you show us the final tax computation document with all the entries, you remove your personal identification details like your name, PAN, email, mobile, address and other such details, and just show the income details that you have entered, and IT department’s tax calculation. I am sure, there will be someone who can help you.

I don’t know why IT department’s website calculates tax, when you have no taxable income. I have never faced your problem but I did not use department’s website for filing my returns, but used third party website.

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Thank you very much for the reply.

So does the tax payer have to select somewhere in the form that initial 2.5L shouldn’t be taxed?
In my opinion it should be done automatically.

Extra Info: These details are of my friend who is dependent NRI, and not working anywhere. Just doing CNC buy and sell of stocks in india. So they filed ITR2 form.
Does being an NRI, one has to pay tax no matter how low their income is ?

Note: I want to show you the tax form, but I am not sure that uploading on a public website is a good idea.

You should have said this in the beginning that these calculations are an NRI’s returns. I don’t know what kind of rules apply for NRI. Maybe the department’s system knows his status as NRI and taxed the income.

No need to show the form.

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Thank you for you time.
I will do more research.

same tax slab for nri too. special tax rate are same. You should check on itr computatuon whether he has income from another head.

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