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The cost of acquisition will be the cost of the shares of the original shares purchased of the merging entities

Q. I purchased 23 shares of Oriental Bank of Commerce on May 12, 2005 at ₹2,250 per share and 10 shares of United Bank of India on January 10, 2011 at ₹90 per share .

These banks were merged with the Punjab National Bank on April 1, 2020. I was allotted 26 shares of PNB in lieu of my holding in Oriental Bank and 10 shares of PNB in lieu of my holding in United Bank of India.

I want to sell shares of PNB. I would like to know what would be the date of purchase of the shares of PNB and at what price in order to calculate capital gains tax ?

S.S. Saxena

A. For the purpose of computing the respective capital gains, the period of holding and cost of acquisition will be as follows: the period of holding will be taken into consideration from the date of acquisition of original shares purchased of the merging entities.

The cost of acquisition will be the cost of the shares of the original shares purchased of the merging entities

Q. I am 81 years old with about ₹17 lakh in annual interest income.

Under normal tax rules, as a resident senior citizen, my income tax is about ₹2.3 lakh.

I am now claiming deductions u/s 80C, 80D and 80TTB.

This financial year, I redeemed three mutual fund schemes and got about ₹13 lakh in capital gains. With this LTCG, my taxable income level goes up to ₹30 lakh.

This exceeds AMT liable level of ₹20 lakh.

However, I am not claiming any deductions from Section-10AA, 35AD and Chapter VIA Part C. My doubt is whether I am liable for Alternative Minimum Tax (AMT)?

A. Paramasivachari

A. Alternative Minimum Tax (AMT) is applicable to only those non-corporate assessees who have availed benefits under Chapter VIA Part C, Section 35D and Section 10AA. As you have not availed any of these benefits, AMT will not be applicable in your case.

Q. I am currently studying. Since, I don’t have a job, I don’t have any income. But, I sold my property for a certain value. I need to invest the sum in a fixed deposit.

I was told if the interest per year was more than ₹40,000, then tax would be deducted

But my question is my only income is this ₹40,000 and I come under the ₹2.5-lakh slab. Why should I pay tax then? If I don’t need to pay tax, what is the procedure?

Arun Shanjay

A. Banks are required to deduct tax at a prescribed rate if the interest paid/payable to a non-senior citizen exceeds ₹40,000 in an assessment year.

As stated by you, as your taxable income does not exceed the basic exemption limit, you may submit Form 15G to your respective bank whereby you declare that your taxable income is lesser than the basic exemption limit. Once the bank takes into record the submitted form, they shall not deduct the applicable TDS. You are required to submit this form every assessment year after estimating your taxable income.

Q. If during the financial year 2020-21 (June 2020) one has completed 60 years, is he eligible to claim higher exemptions for income tax purposes for that year?

Raman Swaminathan

A. An assessee will be treated as a senior citizen once he completes the age of 60. You will be treated as a senior citizen for the first time in FY 20-21 (AY 21-22).

(N. Sree Kanth is partner, GSS Associates, Chartered Accountants, Chennai)

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