Taxation On Redemption Of Gold Bond

I have purchased gold bond in 2011. On redemption in 2014, I acquired actual gold. I desire to sale gold in the current calendar year 2015 and want to know whether on sale the surplus, if any, would be short-term capital gain or long-term capital gain and what would be the cost? Also, would indexation would be available?

The exchange of gold bonds at the time of redemption is an altogether fresh transaction where an assessee acquires a different asset. For the purpose of computation of capital gain, on subsequent sale, exchange or transfer of such redeemed gold, the cost of acquisition of gold would be the market value of the bond as on the date of redemption. The question as to whether the gain arising in such cases would be short-term or long-term depends upon the time that has passed between the date of redemption of the gold bond and the subsequent sale of gold. In your case, the redemption took place in 2014 and if you sell subsequently in the calendar year 2015, the period of holding the gold is less than 36 months and therefore any surplus on sale of gold would be treated as short-term capital gain which would be subject to tax at 30 per cent. You will not be entitled to indexation of cost since the gain is short-term.

My husband, who was an employee of a listed company, died while in active service. The company made me a lump sum payment gratuitously. I want to know whether this is taxable under the Income Tax Act 1961.

A lump sum payment made gratuitously or by way of compensation or otherwise to the widow or other legal heirs of an employee who dies while still in active service is not taxable as income under the Income Tax Act 1961. This view has been clearly spelt out by the CBDT in Circular No. 573 dated August 21, 1990.

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I am a non-resident Indian working in Singapore for the last six years. I have surplus funds in my Singapore bank account. If I invest the surplus funds in fixed deposits with a bank in India, would interest earned there on be taxable in India?

If you transfer your surplus funds from Singapore to your NRE (non-resident external) account with a bank in India and invest the said funds in fixed deposit, then interest earned on such fixed deposits is exempt under Section 10(4)(ii) of the Income Tax Act. A person resident outside India referred to in the said section means a person who is not resident in India.

I am a working lady. I got married in 2009. Unfortunately, the marriage did not survive for a long time and ultimately resulted in a divorce. In view of the Family Court Order, I received alimony of Rs 50 lakhs from my exhusband. In addition to that I am also entitled for the next five years to receive Rs 1 lakh per month towards maintenance expenses. Is the alimony and regular maintenance allowance taxable?

The lump sum alimony of Rs 50 lakhs received by you is nothing but a capital receipt in your hand and therefore it is not taxable. The courts have decided from time to time that alimony received on divorce is not taxable in the hands of recipients. The Hon’ble Bombay High Court in the case of of Princess Maheshwari Devi of Pratapgarh (147 ITR 258) has also held that alimony received by an assessee from ex-husband and in terms of the court decree is capital receipt in the hands of the wife. Therefore, Rs 50 lakhs is not taxable. However, The Hon’ble Bombay High Court in the same case has held that monthly alimony over a period of years is liable to tax. Therefore, Rs 1 lakh per month which you would receive from your ex-husband may be taxed on a year to year basis.

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Without prejudice to the Bombay High Court judgement, even Rs 1 lakhs per month may be claimed as exempt on the ground that it is nothing but a gift from your former husband and therefore enjoys exemption in view of Section 56(2)(vi) of the Income Tax Act. The Hon’ble Bombay Tribunal in its latest decision in the case of Prema G. Sanghvi (ITA No. 2109/M/2011) has held that the spouse mentioned in Section 56(2)(vi) includes ex-spouse and therefore the gift or alimony received from an ex-husband would not be subject to tax.

I am an individual owner of agriculture land and am planning to sell it to reduce my existing financial crunch. Would surplus on sale of agriculture land be subject to tax? If yes, what are the documents required to claim exemption

Agriculture land is a capital asset and therefore apparently any surplus arising on sale of capital asset is subject to capital gain tax. However, under Section 2(14) of the Income Tax Act, certain agriculture lands are outside the purview of definition of capital asset. If your land is situated beyond a) 2 kms from the local limits of any municipality or cantonment board and that particular area does not have population of more 1,00,000, or b) 6 kms from the local limits of any municipality or cantonment board and that particular area has a population of more than 1,00,000 but not exceeding 10,00,000, and c) 8 kms from the local limits of any municipality or cantonment board, then the said agriculture land is outside the purview of definition of capital asset and accordingly not subject to capital gain tax. To establish your claim for exemption you need to show that the land is agriculture land in land records and the land falls beyond the area mentioned above.