LTCG Tax: Some points to noteIn this year's budget, the Finance Minister has re-introduced Long Term Capital Gains (LTCG) Tax. So, this tax will be applicable w.e.f. 1st April 2018. As far as I know, this tax was discontinued in 2005. Some salient features of this tax is indicated below:-
1. LTCG Tax is applicable for equities and equity-based mutual funds.
2. LTCG Tax will be @ 10% with no indexation benefit for equity investments.
3. LTCG Tax exemption limit is Rs 1,00,000/-. This is a universal annual limit that includes LTCG earned from all equity investments of an individual investor put together.
4. If an equity investor books LTCG before March 2018, he/she is not liable to pay any tax even if the gains exceed Rs 1,00,000/-. (However, the financial experts are strongly advising against booking LTCG by abruptly selling the equity holdings/mutual fund units, simply to avoid Tax.)
5. If LTCG is booked in the next financial year, the cost price of the investment will be adjusted to the price as on 31st January 2018 for tax liability calculation. (How this would be done, is not fully clear.)
6. If the investor earns a loss with respect to the original purchase price (as calculated above), he/she won't have to pay any LTCG Tax.
Members are requested to indicate other key points in respect of this new Tax which has not been covered above.