Computation of Capital Gains
Capital asset concept changed to Investment Assets: The concept of ‘investment asset’ is made applicable to any undertaking or division of a business. As a result, slump sale would now be capital gain income unlike the earlier proposal of DTC (Direct Tax Code) which sought to tax it as business income .The term ‘investment asset’ also includes within its ambit any security held by a Foreign Institutional Investor (FII).
Rate of TAX:Any capital gains arising from transfer of investment assets would be taxable at normal rates applicable to the resident taxpayer, while it will be taxed at 30% for non-residents.
STT not withdrawn:In line with the RDP(revised Direct tax code ) proposal, there will be no withdrawal of Securities Transaction Tax (STT).
Long term Capital gain on securities Exempted and Short term gain taxes at half rates : Capital gains on sale of shares in a company or equity oriented units held for over a year, subject to STT will be exempt. In case of other capital gains, a standard deduction of 50% is provided for and effectively, the tax rate for individual could be 5%, 10% or 15% depending on the slab rate, and for companies, the rate could be 15%.
Indexation Benefit from year of purchase Not from next year:Similar to the ITA(Income Tax Act), the indexation benefit is now based with respect to year of acquisition of asset as against, the year following the financial year of acquisition provided in DTC2009.
Carry Forward for unlimited period: Capital loss is ring-fenced and an indefinite carry forward period is provided for.
Other Loss can be set off against Capital gain : Losses from any other source are available for set-off against capital gains income.