Tax on long-term capital gains


Tax on long-term capital gains

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Tax on long-term capital gains on units [Proviso under clause (d)to section 112]

Tax on long-term capital gains on units

 

[Proviso under clause (d)  to section 112]

 

[W.e.f. A.Y. 2015-16]

 

Under the existing proviso, where tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or unit or zero coupon bond exceeds 10% of the amount of capital gains before allowing for indexation adjustment, then such excess shall be ignored. As long-term capital gains is not chargeable to tax in the case of transfer of a unit of an equity oriented fund which is liable to securities transaction tax, the benefit under section 112 in respect of unit cover only the unit of a fund, other than an equity oriented fund.

 

The above proviso has been amended so as to allow the concessional rate of tax of 10% on long term capital gain to listed securities (other than unit) and zero coupon bonds.

 

Hence, long-term capital gain from units other than the units of equity oriented fund shall now be taxable @

20% after indexation. The concessional rate of tax of 10% shall not be applicable in the case of such units.

 

Units transferred on or after 01-04-2014 but before 11-07-2014 to be allowed benefit of existing concessional rate of tax: The Finance (No. 2) Act, 2014 has further inserted second proviso to provide that where such units have been transferred on or after 01-04-2014 but before 11-07-2014, it will continue to get the benefit of the above proviso i.e. if there is a long-term capital gain from the transfer of such units, the tax will be levied at the minimum of the following rates:

 

(i20% after indexation of cost,

(ii)10% without indexation of cost.

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