I have copied this text from twitter cannot vouch, if it is correct.
Nifty PE crosses 24|A statistically informed entry-exit model!
So, based on my understanding…
- Long term capital gains will apply from April 01, 2018. Shares sold until March 31, 2018 (which have been held for more than 1 year) will not attract LTCG.
- High price of stock either on NSE or BSE on 31st January will be presumed to be the purchase price as per grandfathering provision.
- If a person has only LTCG of 5 lakhs in a FY, and no other source of income, LTCG rate of 10% will apply instead of slab rate of 5%
Please correct me if I’m wrong.
First 1 lakh free after that RS 2 lakh taxable and it would be taxed at 5 % if no other income. If u have other income and u say fall in 30 % tax bracket this 2 lakh will be taxed at 10 %. No tax on 1 lakh and other tax rates on other income as per slabs.
The full text
Source: http://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf page 29 & 30
Thanks for your reply. Are you sure about this?
From my understanding, special rates are independent of tax slabs. Based on your method, 1 lakh of LTCG is free and since there is no tax for income between 0 to 2.5 lakhs, the entire 3 lakhs of capital gains should be tax free, right?
P.S. - Let’s assume the tax payer is a housewife and has no other source of income except LTCG.
You are right. STCG tax is independent of tax slabs. And same is the case with LTCG tax.
What will be the tax on mutual funds
What if I have a notional loss? What if the share I bought at 100 traded at a high of 85 on 31st Jan 2018? If I sell it in the future for 120, would I be paying 2 as tax or will I be paying 3.50 as the tax?
Are we sure that any selling on or before March 31st is exempt from LTCG? When they increased the eligible holding period for LTCG in debt funds, it was effective immediately.
I think the part where all the gains till 31st January would not be taxed and any gains after that date would be taxed at 10% is the correct interpretation.
However I am a bit confused about the 1 lakh part of the LTCG tax. Does it mean that the LTCG on a single stock would be tax free if the profits are below 1 lakh or does it mean that the total Long term gains of an investor in a year on all the stocks would be tax free upto 1 lakh and 10% LTCG on any amount above it?
Another query, can I offset short term losses against long term capital gains?
Tax increase by the government of the over the period. I am really concerned about the trend.
Taxing should be policy driven. They are ready to put tax on tax which is really disturbing.
I think introduction of LTCG is a good move. Why should corporates & the salaried class, who do all the hard work of increasing corporate earnings, be the only ones who pay income tax? Financial investors who profit from secondary equity markets, which only serves the purpose of providing liquidity to the markets, no value addition to the economy as such, should be taxed.
But I am of the opinion this introduction of LTCG should have been accompanied with a reduction in corporate/individual tax rate. Or at least removal of dividend distribution tax. This government has not kept its promise of reducing the corporate tax to 25% by FY19 (promise was made in the 1st budget).
What about mutual funds. They will be subject to double taxation. One at hands of themselves when they sell shares and then when investor books profit selling his mutual fund investments.
Why do you think Corporates and Salaried class are not Financial Investor? Best of the companies gives ESOPs to reward its Salaried employee, who in turn sell these this shares in open market.
There are many housewives , students and traders who earn from shares their income is less than 2 lakh and it is from short term share trading but they pay zero tax as their income is less than exemption limit.
Having already paid tax on salary, would be nice to have investments made from savings to be tax free. In my opinion, capital gains tax makes sense in developed countries which have social security. A country like India should encourage people to save by making investment income tax free.
My interpretation is, if the capital gains is less than 2.5 lakhs, it is tax free since the gross total income is less than basic exemption limit. Above 2.5 lakhs, tax at special rate of 15% applies for STCG, irrespective of slab rate. This would turn out to be negative if you fall in the 5% slab and positive if you fall in the 20 or 30% slab.