Capital gains on sale of bonds taxable

S.C. Vasudeva

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I had purchased long-term infrastructure bonds (L&T Infrastructure Finance Co. Ltd. - SR-2 - 9 BD - 10JN22 FV Rs 1,000) worth Rs 20,000 on January 10, 2012 through an IPO under Section 80CCF of the Income Tax Act. What will be my tax liability with respect to capital gains if I sell the bonds in the secondary market? The current market price of Rs 2,488 per bond will give me total sale consideration of Rs 49,760 resulting in capital gains of Rs 29,760. — Anonymous reader

The amount of long-term capital gain arising on the sale of bonds will be taxable at 20 per cent plus education cess of 3 per cent thereon.

Are deductions from tax payable up to Rs 5,000 allowed under Section 87A for people whose income does not exceed Rs 5 lakh? On which form are pensioners required to file their return? Is bank mutual fund subscription eligible for rebate under Section 80C?  If so, what is the percentage of rebate? — APS Prawana

Section 87A of the Income Tax Act 1961 as amended by the Finance Act 2016 provides for a rebate of income tax to an assessee whose total income does not exceed Rs 5 lakh to the extent of 100 per cent of the income tax leviable on the total income of the assessee or Rs 5,000 whichever is less.

Pensioners can file their return in form No. ITR-1.

Any contribution by an individual as subscription to the units of mutual funds which are referred to in Section 10(23D) of the Act (mutual funds set by public sector bank or a public financial institution or authorised by the RBI and subject to such conditions as the Central Government may notify) are covered within the provisions of Section 80C of the Act. An amount to the extent of Rs 1.5 lakh can be contributed that will be deducted from the total income of the individual.

On May 16, there was a news item that to get tax benefit on Leave Travel Concession (LTC) given by employers, one has to give proof. Last year, the LTC amount was reduced from the total income while calculating tax. Is this provision -- applicable during FY 2015-16 -- and now the need to give proof of LTC applicable during FY 2016-17? — Manmohan singh

Rule 2B of the Income Tax Rules 1962 provides that the amount exempt from tax in respect of Leave Travel Concession received by an individual from his employer or a former employer for himself and his family in connection with his proceeding on leave to any place in India shall be the amount actually incurred on the performance of such travel subject to the conditions specified therein.

There is thus no change in the provisions for assessment year 2016-17 with regard to exemption being granted in respect of amount so received. Therefore, evidence is required to be tendered for the amount having been spent on performance of travel for claiming exemption from tax in respect of that amount.