Your Queries – Income Tax: You can disclose capital gains from mutual funds and shares in ITR-4


By Chirag Nangia

I am an ayurvedic practitioner and fill up c-4. Can I show income from NFO mutual fund and listed shares in ITR-4 under Section 44 or I should fill ITR-3?—Vishwanath GaurITR-4 can be filed by individuals with income up to Rs 50 lakh from business or profession and have opted for presumptive taxation scheme. As a medical practitioner, you may offer the income to tax under Section 44ADA, i.e., presumptive basis wherein taxable income is deemed to be 50% of gross receipts, with no requirement to maintain books of accounts. No additional deductions in respect of any expenses will be allowed. Further, income from NFO mutual funds and listed shares shall be capital gains and it can be disclosed in ITR-4. Individuals deriving income under the heads ‘Salaries, Business/ Profession and other sources’ are required to file  ITR-3.

An assessee had acquired the tenancy rights via an affidavit executed in her favour by her grandmother, prior to her demise. No money  was invested in acquiring the rights. The assessee transferred her rights to a third party for Rs 20 lakh but did not invest in any tax-savings bond. What is the tax implication?—Ananth NarayanTenancy rights are capital assets and surrender of tenancy rights amounts to transfer. The cost of acquisition would be either the cost of purchase price or in other cases, it would be taken as Nil, excluding acquired by succession or inheritance. Consequently, profit arising from this transfer is long-term capital gains (LTCG) as tenancy rights were acquired more than three years prior to date of transfer, and taxed at 20% beyond basic exemption i.e., Rs 5 lakh in your case, being a resident senior citizen.Further, since tenancy right in a residential house is not same as a residential house, she can’t avail exemption under Section 54 by investing the indexed capital gains but will have to invest the net consideration to avail exemption under Section 54F. Since tenancy right is neither land nor a building, she can’t avail the tax exemption by investing in capital gains bonds under Section 54EC.

The writer is director, Nangia Andersen India. Send your queries to