Frequently Asked Questions
Can I set off my short-term capital loss against any other head of income?
Capital losses can be set off only against capital gains. Accordingly, short-term capital losses can be set off against any income under capital gains, be it short-term or long-term. However, long-term capital losses can be set off only against long-term capital gains.
Is the benefit of indexation available on gains from the sale of a short-term capital asset?
Capital gains are calculated by subtracting the purchase price from the sale price. However, for an asset that has been held for a long period, determining gains by subtracting the purchase price from the sale price without considering inflation would be inappropriate. As a result, the concept of indexing the purchase price has been introduced. The indexed purchase price is subtracted from the sale price to calculate gains. As a result, indexation only applies to long-term investments.
Should an NRI pay taxes on gains made on selling property in India?
Property sold in India is often tax deductible. If the property is a short-term asset, the buyer must deduct taxes at the rate relevant to the NRI's income bracket. If the property is a long-term asset, an LTCG tax of 20% is levied. Furthermore, the NRI must ensure that taxes are deducted on the gains made rather than the sale money. A jurisdictional Assessing Officer can assist in determining which gains should be taxed by the purchaser.
For how many years can you carry forward capital losses for?
If you could not set off your capital loss in the same year, both short-term and long-term losses can be carried forward for 8 assessment years immediately following the specific assessment year in which the loss was computed.
What are the differences between ESOPs and RSUs?
Here are the differences between ESOPs and RSUs:
| Basis | Employee Stock Option Plan | Restricted Stock Units |
|---|---|---|
| Choice to receive the incentive | Employees can choose whether or not to buy the shares. | Employees receive these shares at the end of the vesting period. |
| Market price | Market price plays a big role in an employee's decision. | Market price only matters for taxation. |
| Payment by employees | Employees need to pay to acquire the underlying shares. | Employees get them free of cost from the company. |
| Type of companies | These are popular with start-ups and high-growth companies in their early stage. | These are popular with old companies which are well-established. |
How are ESOPs taxed?
Tax is levied at two points in ESOPs. First, at the time of the exercise of the ESOP. Second, at the time of selling the shares. Exercise of ESOP is taxed under the head ‘Salary’ (perquisite) where the difference between the fair market value of the shares and the exercise price of shares is taxed as per the normal tax slab of the employee. The sale of shares is further subject to tax under the head ‘Capital Gains’, where the difference between the sales price and the exercise price is taxed at capital gain (short- or long-term) rates.
Read in detail here: https://cleartax.in/s/esop
How are RSUs taxed?
RSU taxation in India is the same as any other equity share. For the purpose of taxation, you need to take into consideration the fair market value of the reserved stock units. Fair market value is the price at which these shares are sold on the stock market on the vesting date. The tax on RSU is calculated both on vesting and when the employee sells his/her holdings.
Read in detail here: https://cleartax.in/s/rsu-restricted-stock-unit
How is cryptocurrency taxed in India?
Gains made from trading cryptocurrencies are taxed at 30% (plus 4% cess) according to Section 115BBH. Section 194S levies a 1% Tax Deducted at Source (TDS) on the transfer of crypto assets if the transactions exceed Rs 50,000 (or even Rs 10,000 in some cases) in the same financial year.
Will I be taxed if I receive crypto assets as gifts?
The value of the crypto at the time of gifting will be considered as sale value, and the notional gains will be taxed at 30%
I received payments in the form of crypto. What is the tax implication?
Tax is calculated as 30% on the value of the crypto at the time of receipt and 30% on the gains made when sold. For example, if you received 1 ETH worth Rs.1 lakh as payment for services and you sold it at a price of Rs.1.5 lakh, you will have to pay 30% of Rs.1 lakh plus 30% on Rs.50,000 (gains made) as the total tax due.
