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  • Category: Miscellaneous

    LTCG Tax: Some points to note

    In 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.
  • #625669
    Sir if a person earns only from stock market then which ITR form is to be submitted,
    live happily in every situation of life

  • #625673
    Let us wait for the budget to be passed in the House before we begin discussing it. As of now, it is but a proposal. There could be some changes.
    "A love affair with knowledge will never end in heartbreak." -Michael Garrett Marino

  • #625686
    If it comes into force the salaried employees and middle-class people may suffer a lot. They generally invest some money in this equity-based MF. If they have to pay tax on this gain also what they get will definitely be less than the inflation rate. That means they are losing the money by investing in this like that of FD in a bank. I think the FM may think and see that this tax will not be imposed for some time at least.
    always confident

  • #625702
    There are some confusion elements in long term capital gains and already protests have reached the FM who may simplify some procedures and also release fresh proposal.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #625791
    When we buy a share/fund we pay a Security transaction tax, isn't it correct? We pay a STT to buy, a STT to sell and then now a LTCG. How can we be made to pay once more on money earned from the same share once we sell it after one year (after paying STT). Is it acceptable to tax the same item, literally thrice.

  • #625834
    Hello Babu Saroj,

    Here is an answer for your question..

    Investors should use either ITR1 or ITR2
    ITR1 - Individuals with income from Salary and Interest
    ITR2 - individuals with income from salary, Interest and Rental

    Traders should use either ITR3 or ITR4
    ITR3 - Regular
    ITR4 - Individuals and HUFs with income rom a Property Business or Profession

    Companies should use ITR6

  • #625835

    When LTCG was discontinued then STT was introduced by Govt to get some tax on securities transacted. It was also said at that time that those who are not paying STT will be liable for a tax on unindexed long term gains. Now by again introducing the LTCG a lot of confusion and controversy has created.

    Anyway there is no point in hurriedly selling the stocks before 31st March 2018 just to save some tax and foregoing the good growth in stocks in coming years.

    Frankly speaking if there is a good gain in stocks we should also not shy away in paying some tax. In that light Govt may modify this provision either bringing down this to 5% from proposed 10% or withdrawing it.

    Knowledge is power.

  • #625865
    For any doubts on Long Term Capital Gains introduced in the budget of 2018, the Income Tax Department has given clarifications under Frequently Asked Questions. Members can refer to them for authentic information.
    " Be Good and Do Good "

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