Can one set off short-term capital loss in the current year against “Other Income” earned during the same year?
R. Chitlangia, email

It is not permissible to set off short-term capital loss against any other head of income. As per Section 70 of the Income Tax Act, short-term capital loss can be set off against the income under capital gain head (long-term or short-term capital gain) and long-term capital loss can be set off only against long-term capital gain. If the capital loss (short-term or long-term) cannot be fully set off in the same financial year, the amount of loss can be carried to the next assessment year, and for a maximum of eight assessment years immediately succeeding the assessment year for which the loss was first computed.

I have misplaced my tax refund cheque. Can I adjust it towards next year’s tax returns, or is there a way to get this refund back? How can I get the refund, now that the incident is over one year old?
Mehernaz Muzaffar, email

You cannot adjust the amount of refund of the previous year against the tax liability of this year. If you can’t find the cheque, approach your income tax assessing office for the issuance of a duplicate cheque. In such cases, they issue a duplicate cheque after getting an indemnity bond from the assessee.

I bought some shares six months back and now if I sell them I will make a good profit. How is the capital gain treated from the sale of shares within a year of buying? Please clarify with an example, considering that I am a salaried employee.
Shantanu Nandan Sharma, email

When you make a gain by selling shares which were acquired within one year from the date of sale, the income thus made is termed as a short term capital gain. While computing the total income of an assessee, this amount will be included under the head ‘Income from Capital Gains’.

In your case, since you are a salaried employee, the income from short-term capital gain will be added to the net income from salaries to arrive at your gross total income. Supposing your net taxable income under the head salaries is Rs 8 lakh, and the net amount of short-term capital gain is Rs 1.5 lakh, assuming that you do not have any other income, your gross total income will come to Rs 9.5 lakh. From this amount, you will get the deductions listed under chapter VI A (qualifying amount of life insurance premium, contribution to public provident fund, NSCs, premium on mediclaim policy, donations which qualify under the head ‘donations’, etc.) of the Income Tax Act, 1961. The tax will be payable on the amount arrived at after allowing for deductions. If you paid the securities transaction tax (STT) at the time of sale and purchase of shares, you will be taxed at a concessional rate, that is, a flat rate of 15 per cent on the income from short-term gain. The rest of your income will be taxed at the normal tax rates applicable to your income level.

My employer, by mistake, has deducted extra tax on my current year’s income. Despite my requests, he is not refunding the extra amount deducted. What is my recourse? Can I claim the money from him or the tax authorities?
Rakesh Gupta, email

If your employer has already deducted the tax and deposited it with the tax authorities, he cannot refund the amount to you. The employer will give you a certificate of tax deduction at source. While filing your return of income for the relevant period, you will get the credit for the tax paid by your employers on your behalf.

If the overall amount of tax paid on your behalf works out to be more than the tax due after accounting for your income under all the heads, you will be eligible for a refund. While filing your return of income, you must mention your bank account details, so that the income tax department sends it directly to your bank through the electronic clearing system.

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