Current Income Tax Rate on Long Term Capital Gain (LTCG) @20% u/s 112 of Income Tax Act, 1961 on Land, Building, House Property or other assets but long term gain on listed securities is fully exempted on which STT is paid i.e. if you have sold your shares and securities through recognized stock exchange is India (like BSE and NSE).
Meaning or what is considered as long term capital asset?
♣ If any capital assets is held for more than 36 months and 12 months in case of shares or securities is considered as long-term capital asset and the gain arising out of them is long term capital gain. Long term capital gain is arrived at after deducting from the Net sale consideration, the indexed cost of acquisition and indexed cost of improvement.
Actual cost of Acquisition multiplied by CII of the year in which asset is sold divided by CII of the year in which asset was purchased. Cost of Inflation Index for Year 2012-2013 is 852 and Cost of Inflation Index for Year 2013-2014 is 939.
The long term capital gain are taxed @ 20% after the benefit of indexation. No deduction is allowed from the long term capital gain from S. 80C to 80U.
S. 112(1) provides that any capital gain arising from a long term capital asset being the listed securities which are sold outside the stock exchange, then the long term capital gain shal be calculated as follows:
- Tax arrived @ 20% on such long term capital gain after indexation u/s 48
- Tax arrived @ 10% on such long term capital gain without indexation.
Related Cases:
S. 48, 112 of IT Act, 1961—Capital gain—Merely because the assessee has not claimed indexation on the sale of its bonus shares of Infosys, the revenue cannot deny the benefit of indexation on the sale of shares of other companies to the assessee. Therefore, the assessees claim of computation of long-term capital gains on the sale of shares other than the bonus shares of Infosys, after taking the benefit of indexation is in consonance with the proviso to S. 112(1) and the assessee is assessable to the net long-term capital gains—CIT vs. Anuj A. Sheth, HUF
S. 48, 112 & 115AD of IT Act, 1961—Capital gain—As per S. 115AD of the Act, foreign institutional investor is assessable and for the benefit of indexation on the transactions resulting in long-term capital gain/loss, it is not entitled—Advantage Advisors Inc. vs. Dy. Director of IT (2010) 131 TTJ 41 (ITAT-Mumbai)
S. 2(42A), 2(42B), 17(2) 48, 54EA & 112 of IT Act, 1961—Capital gain—The capital gains arising out of the sale of shares acquired through ESOPs have to be assessed as long-term capital gains. Since the proceeds on sale of shares are assessable as long-term capital gain, the assessee is entitled for all consequential benefits including indexation and exemption u/s 54EA of the Act—ACIT vs. Dhurjati Gupta [2010] 127 TTJ 356 (ITAT-Hyd B)
S. 112, r/w S. 48 of the IT Act, 1961—Capital gain—The benefit of lesser rate of tax conferred by the proviso to S. 112(1) can be invoked by a non-resident. The word before giving effect to 2nd proviso to S. 48 only mean that the calculation under the 2nd proviso shall not enter into the computation of capital gains, wherever that proviso is applicable—Fujitsu Services Ltd., In re.
S. 48, 55(2)(b)(1), 112(1) of the IT Act, 1961—Non-resident—The benefit of the proviso to S. 112(1) cannot be denied to non-resident even if they are entitled to a different relief under the first proviso to S. 48, therefore, assessee can be taxed only at 10 per cent. on the long term capital gains u/s 112(1) of the Act—Four Star Oil and Gas Co., In re (2009) 312 ITR 104 (AAR)
S. 70(3) & 112, Proviso of IT Act, 1961—Capital Loss—The spirit of S. 70(3) covers all such transactions where the gains are arising on the transfer of long-term capital asset and in case of any set off of loss arising from one source i.e. transfer of long term capital asset against gain arising on the transfer of another source of transfer of long-term capital asset is to be allowed under the provisions of S. 70(3) of the Act, Hence, the capital loss worked out by the assessee with indexation can be set off against the long-term capital gains without indexation worked by the assessee in the original computation of income—Keshav S. Phansalkar vs. ITO [2010] 3 ITR(Trib) 236 (ITAT-Mumbai B)
S. 112, r/w S. 48 of IT Act, 1961—Capital gain—The applicant is a company of Scotland and it acquired shares of an Indian company pursuant to a agreement. The applicant transferred certain shares of this India company to other Indian company for certain consideration. The transaction took place in off market made and not through the recognized stock exchange. The applicant sough advance ruling on the question whether tax payable on long-term capital gains arisen to it on sale of equity shares of Indian company will be 10 per cent of amount of capital gains as per proviso to S. 112(1) of the Act. Ambit of proviso placed below sub-cl. (d) of S. 112(1) extends not only to sub-cl. (d) to S. 112(1) but to all sub-cl. to S. 112(1) of the Act. The application of said proviso is based on capital asset to which provisions of second proviso to S. 48 apply and since second proviso to S. 48 is not applicable to non-resident, benefit of lower rate of tax under this proviso cannot be given to non-residents. Therefore, applicant, a non-resident company, is not eligible to the benefit of lower rate of tax under said proviso on capital gains on sale of shares of Indian company—Carin U. K. Holdings Ltd., In re.
S. 112 of IT Act, 1961—Capital Gain—A.Y. 2002-03—(i) Applicability of second proviso to S. 48 is not a condition precedent for availing of benefit of lesser rate of tax of 10 percent under proviso to S. 112(1) of the Act (ii) Interest for delay in making open offer paid to shareholders at the time of purchase of shares on the directives of SEBI shall be treated as a part of cost of acquisition of shares.
S. 112(1), Prov. (iii) of IT Act, 1961—Capital gain—The proviso to S. 112(1) applies to all the clauses of sub-s. (1) and a non-resident or foreign company is not disentitled from invoking the proviso to S. 112(1) on the ground that it is not eligible to get the benefit of the second proviso to S. 48 of the Act—Burma Castrol PLC.,
Reference:
As Per S. 112 of the Income Tax Act, 1961-
Tax on long-term capital gains.
112. (1) Where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head “Capital gains”, the tax payable by the assessee on the total income shall be the aggregate of,—
(a) in the case of an individual or a Hindu undivided family, [being a resident,]—
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income ; and
(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent :
Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent;
(b) in the case of a [domestic] company,—
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and
(ii) the amount of income-tax calculated on such long-term capital gains at the rate of [twenty] per cent :
(c) in the case of a non-resident (not being a company) or a foreign company,—
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and
(ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the rate of twenty per cent; and
(iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities, calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48;
(d) in any other case [of a resident],—
(i) the amount of income-tax payable on the total income as reduced by the amount of long-term capital gains, had the total income as so reduced been its total income ; and
(ii) the amount of income-tax calculated on such long-term capital gains at the rate of [twenty] per cent.
Explanation.—Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities [or unit] [or zero coupon bond], exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee.
The following second proviso shall be inserted after the existing proviso to sub-section (1) of section 112 by the Finance (No. 2) Act, 2014, w.e.f. 1-4-2015 :
Provided further that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being a unit of a Mutual Fund specified under clause (23D) ofsection 10, during the period beginning on the 1st day of April, 2014 and ending on the 10th day of July, 2014, exceeds ten per cent of the amount of capital gains, before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee.
Explanation.—For the purposes of this sub-section,—
(a) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956);
(aa) “listed securities” means the securities which are listed on any recognised stock exchange in India;
(ab) “unlisted securities” means securities other than listed securities;
(b) “unit” shall have the meaning assigned to it in clause (b) of Explanation to section 115AB.
(2) Where the gross total income of an assessee includes any income arising from the transfer of a long-term capital asset, the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
(3) Where the total income of an assessee includes any income arising from the transfer of a long-term capital asset, the total income shall be reduced by the amount of such income and the rebate under section 88 shall be allowed from the income-tax on the total income as so reduced.