Rates Of Capital Gain Tax

1. Short-term capital gain is taxed at normal rate. In respect of Listed Securities transferred on or after 1.10.2005,
Section 111A will apply i.e. taxable at 10%.

2. Long-term capital gain other than gains arising out of transfer of security including Zero Coupon Bonds are taxed as follows :

 

Kind of AssesseeTax %
(a) Individual and HUF Resident Non-Resident [not covered in (d)]20%
(b) Venture capital company on transfer of equity shares of venture capital undetaking
(c) Company [not covered in (b)]
Domestic Company
Foreign Company (not covered in (d)]
20%
(d) Offshore funds
Non-resident assesses, foreign institutional investors covered by Sections 115AB/115AC/115AD
15%
(e) Any others (Firm, AOP, BOI etc.)
• Resident
• Non-Resident [not covered in (d)]
20%

Note : The rates given above are Basic Rates. Appropriate Surcharge, Education Cess and Secondary and Higher Education Cess are also applicable in addition to the tax rate mentioned above.

3. Long-term capital gain arising from transfer of security listed in a Recognized Stock Exchange, not covered by Securities Transaction Tax:
(a) Compute capital gain without indexation and charge tax @ 10%.
(b) Compute capital gain with indexation and charge tax @ 20% as per Section 112
(c) The assessee has the option to choose either of the above whichever is beneficial to him.
(d) Long Term Capital Gain arising on listed securities being Equity Shares and Units of Equity Oriented

Notes :
(a) No deduction shall be allowed under Chapter VIA in respect of income from long-term capital gain.
(b) Special Benefit for Resident Individuals HUF: Applicability: Resident Individual or Resident HUF

Condition: Total income excluding Long-Term Capital Gains Is less than the basic exemption. Benefit:

Tax on Long-Term Capital Gain Is determined as follows–

Tax on LTCG = 20% [Total Income including LTCG – Basic Exemption]

Only that amount of long-term capital gains which is included in the total income would be Cir. No.

721/13.9.95 subject to tax at a prescribed flat rate u/s 112.

4. Tax on Short Term Capital Gain on Listed Securities – Section 111A (w.e.f. 1.10.2005)
(a) Applicability: All Assesses
(b) Source of Income:

• Income from Short Term
  Oriented Fund.
• The transfer has been affected on or after 1.10.2005
• Such transaction is liable for Securities Transaction Tax.
(c) Rate of Tax: 10% of Short-term Capital Gains

Notes :
(a) Chapter VI-A deduction shall not be allowed in respect of income from such Short Term Capital Gain.
(b) Special Benefits for Resident Individuals or Resident HUF: Applicability: Resident Individual or Resident

HUF Condition: Total income excluding Short -Term Capital Gains is less than the basic exemption.
Benefit: Tax on Short-Term Capital Gain is determined as follows:

Tax on STCG = 10% [Total Income including STCG – Basic exemption]

Funds, transferred on or after 1.10.2005 is exempt from tax u/s 10(38).

48. Set off and carry forward of losses under the head Capital Gains.

1. Treatment for Current Year Loss: (Section 70 &. 71)
(a) Current year Short Term Capital Loss can be set off against any capital gain accrued during, the previous year, but It cannot be set off against income under any other head.
(b) Current year Long Term Capital Loss shall be set off only against Long Term Capital Gains.
2. Treatment for Carry Forward Loss: (Section 74)
(a) Unabsorbed Loss under the head Capital Gains shall be carried forward for a period of 8 Assessment Years immediately following the Assessment Year in which such loss was incurred.
(b) The carry forward short-term capital loss can be set off against any capital gains.
(c) The carry forward Long Term Capital Loss can be set off only against Long Term Capital Gains.

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