Long Term Capital Gain: The Income Tax Department has received information that some people are deceiving the Income Tax Department by showing the income earned in this way as long term capital gain. Not only this, some people are also reducing tax liability by showing short term losses through this.
Pennystock Scam: If you have also invested money in any penny stock, then this news may surprise you. Yes, those who earn big money in a short time by investing in such cheap shares are on the target of the Income Tax Department. The department is demanding huge taxes from such investors on the basis of income. If you yourself or someone you know has earned money from such shares, then there can be a big problem in the future. Such investors may have to pay heavy taxes along with fines. The Income Tax Department considers the income earned from such stocks as undeclared income.
Be prepared to pay up to 80% tax!
Undisclosed income is the income about which information is not given by the earner and a tax of 60% is imposed on such money. Apart from this, by adding 25% surcharge, fine and cess on it, it can increase to more than 80%. That means, if you have earned Rs 100, your income may reduce to Rs 20. Despite this, there is no guarantee that you will not have to face any kind of problem. But if the investors prove that they are genuine investors then they can get relief from this.
What needs to be done for relief?
To get tax relief up to 80 percent, you can appeal in the Income Tax Appellate Tribunal (ITAT) or the High Court. Tax experts say that in this situation it is important for you to have complete documents. Income Tax Department officials are very alert about the ‘Penny Stock’ scam. Through such scams, some people are collecting black money and taking advantage of income tax. Through this, long term capital gain (LTCG) or short term capital loss or business loss is claimed. Adjusting income by showing losses as short term capital loss reduces tax liability.
How is the game going
Whenever a ‘penny stock’ scam is caught, the Income Tax Department officials, on the basis of the investigation report, consider the income from such shares not as Long Term Capital Gain (LTCG) but as undisclosed income. According to the rules of the Income Tax Department, more tax has to be paid on undisclosed income. But its loss is caused to such investors who have earned real income by investing in these shares. As per rules, if investment is made in a share for more than one year, then the profit from listed shares is considered as long term capital gain and 10 percent tax is payable on it.
From April 1, 2018, there is a rule to pay 10 percent tax on Long Term Capital Gain (LTCG) of more than Rs 1 lakh. Thus it is much less than 80%. Experts related to tax matters say that not every investor can be considered a wrong investor by the Income Tax Department. There are thousands and lakhs of investors in the market who buy and sell shares on the basis of rumors and tips. It is not necessary that any investor has got huge benefits from any penny stock and those benefits are not real.
