I have been in employment since May 2006. I wish to withdraw the Provident Fund amount with my previous employer. Will tax be deducted at source on such withdrawal as I have been in employment for less than five years? Is it advisable to withdraw the amount or to get the money transferred to my current employer? - K.M. Sridhar
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Withdrawals from a recognised PF account will be taxable if the employee has not rendered continuous service for five years or more. Only if such continuous service is rendered, will the sum withdrawn be exempt under Section 10(12).
In computing continuous service, the duration for which the employee served the previous employer is also aggregated if the accumulated balance in the recognised provident fund is transferred from the account maintained by the earlier employer to the current one.
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As you have not rendered continuous service for five years, any withdrawal would render the employer's contribution and interest on the balance standing to the credit taxable. It would be advisable to transfer the money to your current employer's account and withdraw after five years of continuous service.
Can long-term capital loss incurred in a financial year from sale of shares be set off against the short-term capital gains earned in the same year or can short-term capital loss be set off against long-term capital gains of the same year? - Ashwin Bhagat
Section 70(2) of the Income-Tax Act provides that where an assessee incurs a loss in respect of a short-term capital asset, such loss can be set off against income arrived at under a similar computation made for the assessment year in respect of any other capital asset.
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Section 70(3) says when an assessee incurs a loss in respect of a capital asset other than a short-term capital asset, such loss can be set off against income arrived at under a similar computation made for the assessment year in respect of any other capital asset not being a gain from a short-term capital asset.
In your case you will not be able to set off the long-term capital loss. But it may be noted that long-term capital gains on sale of shares through a recognised stock exchange and where securities transaction tax is paid are not taxable under section 10(38) and the loss would have to be ignored. You will be able to set off the short-term capital loss incurred during a financial year against the long-term capital gain.
However you will not be able to set off a short-term capital loss against a long-term capital gain if such gain is exempt under section 10(38). You may also not that a long-term capital loss other than a loss ignored under section 10(38) can only be set off against long-term capital gains and not against short-term capital gains.
I am working in a public sector undertaking. My taxable salary for 2008-09 was Rs 4.50 lakh and my employer has deducted Rs 48,000 as tax at source. I have made some delivery-based share transactions during the year and suffered a loss of Rs 1.50 lakh.
Can this loss be treated as short-term capital loss as I have held the shares for less than a year? If so, can I adjust the capital loss against my salary income and claim refund of the tax deducted at source by my employer? What documents should I file along with the return of income to prove the short-term capital loss suffered on share transactions? Will the ledger report given by the sharebroker be enough proof? - Appusalu
Section 71 prohibits the set-off of loss under the head capital gains against income from any other head. Such loss can by virtue of section 74 only be carried forward and set off in subsequent years. Therefore, you cannot set off the loss from share transactions against your salary income and claim refund in 2008-09. This being so, furnishing of proof for 2008-09 also does not arise.
I, a senior citizen, had placed Rs 15 lakh in a fixed deposit. As interest rates of banks climbed above 10 per cent I redeemed my deposit before the end of the maturity period of five years. The bank charged 1 per cent on my principal. I had to forego Rs 15,000. I have now deposited the amount at 11 per cent interest with a bank. Am I eligible to deduct the loss of Rs 15,000 that I had incurred on the redemption against my interest income under the head income from other sources? - S.K. Khanna
No, you cannot claim deduction.
During 2009-10 I spent nearly Rs 15,000 on my medical expenses. My employer reimbursed Rs 7,000. Can I claim any tax benefits in respect of the remaining Rs 8,000? - Tridip
You may not be eligible for any tax deduction for the Rs 8,000 spent by you for medical treatment not reimbursed by your employer unless it was for a medical treatment of a disease or ailment specified in Rule 11DD of the Income-Tax Rules.
