Where the total income of a resident individual exceeds ₹12 lakh, the individual is not eligible to claim the rebate under the relevant provisions
I am a housewife (non-senior citizen) and earn ₹6 lakh by way of interest from bank deposit, ₹4 lakh by way of dividend from listed companies and ₹2 lakh by way of rental income from residential property, in all totalling ₹12 lakh.
Besides, I have ₹2 lakh under Long Term Capital Gain (LTCG) and ₹6 lakh under Short Term Capital Gain (STCG). Both the gains are from secondary market stock trading.
Under the proposed Budget 2025 provisions, I believe I am not required to pay tax on my entire ₹12 lakh from bank interest etc, while I need to pay 12.5 per cent on LTCG and 20 per cent on STCG. Can you please confirm whether my understanding is correct?
Saranya NT
Where the total income of a resident individual exceeds ₹12 lakh, the individual is not eligible to claim the rebate under the relevant provisions. As per the latest amendments to the Income-tax Act, 1961 (the Act), you are correct that the applicable tax rates on capital gains are: LTCG – 12.5 per cent and STCG – 20 per cent.
Please note that the above tax rates are applicable only in case of gains made from sale of listed equity shares and units of equity-oriented mutual funds.
The total tax liability will be computed based on the individual’s total income, which in your case is as follows:
Income from house property: Gross rent – ₹2 lakh less standard deduction under Section 24(b) of the Act (30 per cent) – ₹60,000 will result in a net income from house property of ₹1.4 lakh
Income from capital gains: LTCG – ₹2 lakh and STCG – ₹6 lakh which brings the total capital gains to ₹8 lakh
Income from other sources: Interest from bank deposits – ₹6 lakh and dividend income ₹4 lakh. Accordingly, the income from other sources is ₹10 lakh
Total income = ₹1.4 lakh (house property) + ₹8 lakh (capital gains) + ₹10 lakh (other sources) = ₹19.4 lakh
Since your total income exceeds ₹12 lakh, you will not be eligible to claim the rebate. It is important to note that the rebate is available only when the total income—i.e., the aggregate of income under all heads—does not exceed ₹12 lakh. Additionally, regardless of the total income, income from LTCG and STCG will be taxed at the applicable rates mentioned above.
The author is a practising chartered accountant
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Published on May 17, 2025
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