Compute the taxable income and tax liability of Mr. Karanveer for the Assessment year 2024-25. (Assume he has not exercised the option to shift out…

Computation of total income and tax liability of Mr. Karanveer for A.Y. 2024-25 under default tax regime Particulars Amount (₹) Amount (₹) Capital Gains Long term capital gain on sale of equity shares of X Ltd. Full value of consideration 1,30,00,000 Less: Expenditure on Transfer 26,000 Net consideration 1,29,74,000 Less: Cost of Acquisition [Since tax liability is to be computed as per 115BAC, no foreign currency and indexation benefit available u/s 112A] 90,00,000 39,74,000 Short term capital gain on sale of equity shares of Y Ltd. Full value of consideration [₹ 65,00,000/83.15, being average of TTBR and TTSR on 28.2.2024] $78,171.98 Less: Expenditure on Transfer [13,000/83.15, being average of TTBR and TTSR on 28.2.2024] $ 156.34 Net consideration $ 78,015.64 Less: Cost of Acquisition [ 50,00,000/ 80.95, being average of TTBR and TTSR on 1.8.2023] $ 61,766.52 $ 16,249.12 TTBR as on 28.2.2024 82.80 Short term capital gains [$ 16,249.12 × 82.80] 13,45,427 Capital gains on sale of GDRs of Z Ltd. Transfer of GDR by a non-resident to another resident outside India is not regarded as transfer - Long term capital gains on sale of GDRs of A Ltd. Full value of consideration 15,00,000 Less: Expenditure on Transfer 3,000 Net consideration 14,97,000 Less: Cost of Acquisition 12,00,000 Long term capital gains [No indexation benefit would be available] 2,97,000 Income from Other Sources Gift of plot from wife's cousin [Taxable, since stamp duty value exceeds - 50,000 and wife's cousin does not fall within the definition of relative] 2,48,000 Difference of 85,000 [₹ 85 (₹ 210, being lowest market quotation in recognized stock exchange -125, being purchase price) × 1,000] in the value of shares of Bright Limited purchased from his friend [Taxable, since difference exceeds - 50,000] 85,000 Interest of 1,25,000 on NRE Account [Exempt under section 10(4)(ii)] - Interest on debentures of X Ltd. [Subscribed in convertible foreign exchange] 1,75,000 5,08,000 Gross Total Income/Total Income 61,24,427 Gross Total Income/Total Income (Rounded off) 61,24,430 Tax Liability Tax @10 u/s 112A on 38,74,000, being the amount in excess of 1lakh on sale of equity shares of X Ltd. 3,87,400 Tax @15% u/s 111A on 13,45,427 on sale of equity shares of Y Ltd. 2,01,814 Tax @10% u/s 115AC on 2,97,000 on sale of GDRs of A Ltd. 29,700 Tax @20% u/s 115A on 1,75,000, being interest on debentures 35,000 Tax at slab rates on other income of 3,33,000 1,650 6,55,564 Add: Surcharge@10% [Since the total income exceeds 50lakhs but does not exceed 1crore] 65,556 7,21,120 Add: Health & Education Cess@4% 28,845 Tax liability 7,49,965 Tax liability (Rounded off) 7,49,970 ALTERNATIVE The facts of the case study state that Mr. Karanveer is a non-resident Indian¹ and he has not exercised the option to shift out of the default tax regime. As he has purchased the specified asset, being shares of an Indian company in convertible foreign exchange, he is eligible to be governed by the provisions under Chapter XII-A unless he chooses to opt out of it. Since there is no information in the facts about Chapter XII-A, the main solution is given by computing total income and tax liability of Mr. Karanveer as per the default tax regime ignoring the provisions of Chapter XII-A. However, considering that he has not opt out either of default tax regime or Chapter XII-A, alternate solution is given by computing the total income and tax liability of Mr. Karanveer under default tax regime along with the provisions of Chapter XII-A. Computation of total income and tax liability of Mr. Karanveer for A.Y. 2024-25 under default tax regime with Chapter XII-A Particulars Amount (₹) Amount (₹) Capital Gains Long term capital gain on sale of equity shares of X Ltd. Full value of consideration [₹ 1,30,00,000/ 83.15, being average of TTBR and TTSR on 28.2.2024] $1,56,343.96 Less: Expenditure on Transfer [ 26,000/ 83.15, being average of TTBR and TTSR on 28.2.2024] $ 312.69 Net consideration $ 1,56,031.27 Less: Cost of Acquisition [ 90,00,000/ 75.85, being average of TTBR and TTSR on 1.7.2020] [No indexation benefit would be available] $ 1,18,655.24 $ 37,376.03 TTBR as on 28.2.2024 82.80 Long term capital gains [$ 37,376.03 × 82.80] 30,94,735 Less: Exemption u/s 115F [30,94,735 × 1,25,000/1,29,74,000 29,817 30,64,918 Short term capital gain on sale of equity shares of Y Ltd. Full value of consideration [₹ 65,00,000/ 83.15, being average of TTBR and TTSR on 28.2.2024] $78,171.98 Less: Expenditure on Transfer [13,000/83.15, being average of TTBR and TTSR on 28.2.2024] $ 156.34 Net consideration $ 78,015.64 Less: Cost of Acquisition [50,00,000/80.95, being average of TTBR and TTSR on 1.8.2023] $ 61,766.52 $ 16,249.12 TTBR as on 28.2.2024 82.80 Short term capital gains [$16,249.12 × 82.80] 13,45,427 Capital gains on sale of GDRs of Z Ltd. Transfer of GDR by a non-resident to another resident outside India is not regarded as transfer - Long term capital gains on sale of GDRs of A Ltd. Full value of consideration 15,00,000 Less: Expenditure on Transfer 3,000 Net consideration 14,97,000 Less: Cost of Acquisition 12,00,000 Long term capital gains [No indexation benefit would be available] 2,97,000 Income from Other Sources Gift of plot from wife's cousin [Taxable, since stamp duty value exceeds - 50,000 and wife's cousin does not fall within the definition of relative] 2,48,000 Difference of 85,000 [85 (₹ 210, being lowest market quotation in recognized stock exchange -125, being purchase price) × 1,000] in the value of shares of Bright Limited purchased from his friend [Taxable, since difference exceeds - 50,000] 85,000 Interest of 1,25,000 on NRE Account [Exempt under section 10(4)(ii)] - Interest on debentures of X Ltd. [Subscribed in convertible foreign exchange] 1,75,000 5,08,000 Gross Total Income/Total Income 52,15,345 Tax Liability Tax @10 u/s 115E on 30,64,918, being the LTCG on sale of equity shares of X Ltd. 3,06,492 Tax @15% u/s 111A on 13,45,427 on sale of equity shares of Y Ltd. 2,01,814 Tax @10% u/s 115AC on 2,97,000 on sale of GDRs of A Ltd. 29,700 Tax @20% u/s 115E on 1,75,000, being investment income 35,000 Tax at slab rates on other income of 3,33,000 1,650 5,74,656 Add: Surcharge@10% [Since the total income exceeds 50lakhs but does not exceed 1crore] 57,466 6,32,122 Add: Health & Education Cess@4% 25,285 Tax liability 6,57,407 Tax liability (Rounded off) 6,57,410