Capital Gains if Borrowed Funds Used

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  1. Albin L

    Albin L New Member

    Dear Sir

    1) Implications on STCG tax if borrowed money used : Suppose I use borrowed funds for 6 months and pay interest for those 6 months to the lender and make a profit of Rs 2 lacs . What will now be the income tax on that 2 lacs profit made which otherwise can be treated as short term gain with 15% tax


    2) Implications of LTCG if borrowed money used : Suppose I use borrowed funds for 14months and pay interest for those 14 months to the lender and make a profit of Rs 4 lacs . What will now be the income tax on that 4 lacs profit made which otherwise can be treated as long term gain with 0 % tax


    3) Implications on Non Speculative( Futures & Options) tax if borrowed money used: Suppose I use borrowed funds for 6 months and pay interest for those 6 months to the lender and make a profit of Rs 2 lacs in F & O . What will now be the income tax on that 2 lacs profit made which otherwise can be treated as non speculative business income and tax will be on the basis of the applicable tax slab

    4) Implications on Speculative tax if borrowed money used( Intra Day): Same thing, Suppose I use borrowed funds for 6 months and pay interest for those 6 months to the lender and make a profit of Rs 2 lacs in intraday . What will now be the income tax on that 2 lacs profit made which otherwise can be treated as speculative business income and tax will be on the basis of the applicable tax slab

    5) Interest Deduction in the tax calculation, if any

    Kindly guide on the above
    Regards
    Albin
     
  2. ZED

    ZED Well-Known Member

    If its a business income, then interest can be allowed as deduction but if its a capital gain income then no deduction can be claimed except for those mentioned u/s 48 and S.48 does not consider interest expense.
     
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