Taxability of Different Incomes

Income Tax
Income from Other Sources

Example

Suppose we purchase the shares on which dividend was due of Rs 50000 on 10 June

We earn dividend of Rs 2000 on 14 June

and sell shares immediately after earning dividend for Rs 48000 on 18 June

Such a transaction is called dividend stripping transaction

and Date of earning dividend i.e. 14 June is called Record Date

What is tax effect?

As per section 94(7)

If a person purchases the security 3 months before record date

And sells it within 3 Months of record date [9 months in case of units]

And

Dividend is exempt

Then such loss up to the amount of dividend shall be ignored.

Record Date: - It is the date of declaring of dividend on shares

 Type of Security Purchase within Sale Within Other Securities 3 months 3 months Units of Mutual Fund 3 months 9 months

Q1 Suppose a person purchases shares for Rs 100000 on 1 September,earns Rs 10000 dividend on it on 15 September

and Sells shares back for 90000 on 20 September

What is Record Date

What is the tax effect?

Q2 Solve Q1 assuming shares were sold for 91000

Q3

Solve Q1 assuming shares were sold for 88000