Tax Type
Tax applicable
Long-term capital gains tax
(LTCG Debt) 20.6% with indexation, (LTGC – Equity) 10% over and above Rs 1 lakh
Short-term capital gains tax
(STCG with no STT) added to your income & pay accordingly, STCG with STT 15%.
LTCG on Property
20% with indexation
STCG on Property
add to your income and file ITR
Short term or Long term
Equity Shares/ MF: above 12 months LTCG
Debt Shares: above 36 Months comes under LTCG.
Property: above 2 years comes under LTCG, selling before 2 years of purchase comes under STCG.
Calculating
Deduction for Equity: Broker charges, (STT not deductible)
Deduction for Property:
- cost of transfer stamp duty, brokerage commission, Travelling expenses
- cost of acquisition
- cost of improvement
- indexed cost of acquisition
indexed cost of improvement
others deductions: section 54,54EC,54F,54B
Equity shares: no indexation benefit allowed
but below 1 lakh no tax.
Inflation: (the difference between last year price & present price of consumables) yearly 5-10% ex: milk last 45 this year 55. school fees etc.
1.Indexed cost of acquisition = Cost of acquisition (purchase price) * Cost Inflation Index (CII) of the year in which the asset is transferred / Cost inflation index (CII) of the year in which asset was first held by the seller or 2001-02 whichever is later.
2.Indexed cost of improvement = Cost of improvement(ex: renovation) * Cost inflation index of the year in which the asset is
3.transferred (cost of transfer) / Cost inflation index of the year in which improvement took place
Section 54F (exception for buying a new house with capital gain)
is available on long-term Capital Gain on sale of any asset other than a House Property.
conditions:
- 1.purchasing new property either home 1 year before or after 2 years of the sale/transfer (
paying the amount within 1 year allowed. - 2. you should not own more than one house, other than the new one,
- 3. you do not sell another house other than new one within 3 years.
- 4. you do not purchase a new house within 2 years.
- 5. under construction house must be completed in 3 years.
Exemption u/s 54F, Home Loan Repayment
Section 112A(Sale of stocks) LTCG
the effect from 1st April 2018, provisions of section 10 (38) will not be applicable to business trust.
section 48 i.e. benefit of indexation of cost of acquisition and cost of improvement
cost of acquisition after 3 years of the sale
Section 54EC: purchasing Capital Gains Bonds
National Highway Authority of India or by the Rural Electrification Corporation Limited within 6 months up to 50 lakhs for FY. for 3 years lock-in period.
Capital Gains Account Scheme:
NOTE: Agricultural land in a rural area is not considered as a capital asset.
Capital Gain Index:
Cost Inflation Index (CII)
budget 2019 section 54 LTCG on Selling Property
capital gains earned by selling a residential property could be used for construction or to buy another house increased to 2 properties and capital gain up to 2 crores once in a life time.
The Cost Inflation Index Chart has the data which can reduce capital gains tax by lakhs of rupees.
If the price of land increased by 100% in 4 years and inflation increased by 50% in this period. The real profit will be 50% (100%-50%).
the cost inflation index is based on the
(70%)average rise of a consumer price index (CPI) by CBDT eery year June.
Real Profit = Sale Price – (Purchase Price + Purchase price * Inflation )
= 36,000 – {30,000+ (30,000*10%)}
36-33=3K Profit.
Capital gain tax
20% tax with indexation benefit
10% tax without indexation benefit.