My grandmother had bought some shares before 1980. My mother, who inherited it in 2021, gifted it to me and I sold it in January 2022 to buy a house. What will be the cost of acquisition (COA) of these shares? Also, will the benefit be treated as LTCG or STCG?
– Harshit Doshi
Since the shares were purchased by your grandmother (being the original owner), which were then given to your mother under a will and then later given to you as a gift, the COA for such shares would be the cost at which But your grandmother bought such shares. , However, since your grandmother purchased these shares before April 1, 2001, the COA would be the fair market value (FMV) as on April 1, 2001, or the purchase price of the shares, whichever is higher.
Further, in the case of equity shares listed in India, the COA for computing LTCG shall be greater than the FMV of the shares as on 1st April 2001 or the COA of the original owner or the FMV of the shares as on 31st January 2018 (subject to maximum selling price). ) Since your grandmother has assets from the 1970s-80s, which are sold in January 2022, the same will qualify as a long-term capital asset and the profit/loss will be LTCG/L.
I am a government employee and I get gross annual salary 7,90,864. This includes the contribution of NPS (Tier 1) 79,198, a premium of 7,800 towards medical insurance, and 50,000 each in PPF and NSC respectively. I want to know if I can claim 29,198 deduction under section 80CCD(1B) as part of own NPS contribution and 1.5 lakh deduction under section 80C.
– Shivam
it is assumed that 79,198 for NPS deducted from your salary is your own contribution to NPS and does not represent employer’s contribution to NPS. As per the provisions of section 80CCD(1), a person employed by the Central Government on or after 1st April, 2014 shall be allowed a deduction of up to 10% of the defined salary for the amount paid under the notified pension scheme (including NPS) . (Being Basic and DA). In addition, section 80CCD(1B) allows an additional deduction of 50,000 for employee contribution to NPS, provided no deduction has already been considered under section 80CCD(1) for the same amount paid.
Accordingly, your NPS contribution 79,198 can be divided as 50,000 under section 80CCD(1) (assuming it is within 10% of the defined pay) and balance amount 29,198 u/s 80CCD(1B) for the purpose of deduction of tax. Since your investment in the fund eligible for deduction under section 80C is 150,000 ( 50,000 each in PPF, NSC and NPS), you are eligible to claim NPS contribution in addition to 29,198 as deduction under section 80CCD(1B). If your employer is unable to consider a deduction in your payroll, you can consider it under section 80CCD(1B) while filing your return of income.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG in India.
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