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In FY25, I have short-term capital gains (STCG) from equity of ₹30,000 and my salary is ₹2.58 lakh per annum. Do I need to pay STCG tax?
—Name withheld on request
If you’re earning ₹2.58 lakh annually and made ₹30,000 in STCG from stocks in FY25, the answer depends on your tax regime and residential status.
Assuming you’re an Indian tax resident under 60 years of age and have no other income besides the ₹2.58 lakh salary and ₹30,000 STCG, you are eligible for the basic exemption limit applicable under your chosen tax regime.
Also read: For regular income in retirement, you can’t beat debt mutual funds
Under the old tax regime, you can claim a standard deduction of ₹50,000 from your ₹2.58 lakh salary, leaving a net salary income of ₹2.08 lakh. Add your ₹30,000 capital gains, and your total income becomes ₹2.38 lakh—well below the basic exemption threshold of ₹2.5 lakh. So, no tax is payable.
Under the new tax regime, you are eligible for a higher standard deduction of ₹75,000. That reduces your salary income to ₹1.83 lakh. Adding the ₹30,000 STCG, your total income is ₹2.13 lakh, which is below the ₹3 lakh basic exemption limit under the new regime. Again, no tax would be payable.
Also read: How to calculate tax if capital gains are your sole income in FY25
The situation changes if you’re a non-resident for tax purposes. In that case, you cannot claim the basic exemption limit against short-term capital gains on listed equity shares or equity mutual funds. So, even if your income is below ₹2.5 lakh or ₹3 lakh, STCG will be taxable and you won’t be eligible for rebates or standard deductions.
I’m 74, an OCI holder with a foreign passport, and a tax resident in India. I pay tax here on Indian and foreign income. My wife is Indian citizen, has no income. Can I transfer fund from abroad to her as gift—from investments, pension payouts, or insurance maturities? Can she invest the funds in FDs, equity funds or property? What are the tax implications for both of us?
—Name withheld on request
Qualifying as a tax resident of India, sale of investments/insurance, maturity funds/lump sum pension superannuation payouts and other funds, whether in or outside India will be taxable in your hands, as per the applicable Indian tax provisions and reliefs under Double Tax Avoidance Agreements. Gifts received by an individual from a specified relative (which includes spouse), is fully exempt from taxation in the hands of recipient. Hence, any sum/assets received by your wife from you out of these fund (irrespective of the quantum), won’t be taxable in your wife’s hands.
Under clubbing provisions of Indian tax laws, any income arising to the spouse from the money/ asset gifted, is clubbed and taxed for the transferor spouse. So, any income earned by your wife by investing the funds gifted by you, shall be clubbed in your income and taxable at applicable rates. There is a view that any subsequent income of your wife on reinvestment of such income should be taxable in her hands.
The above response doesn’t include requirements under Indian foreign exchange regulations and needs to be evaluated separately. Implications of transactions in any country other than India must be evaluated separately.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.
