From a personal savings and investment perspective, the restoration of long-term capital gains tax on equity income is a huge change.

Selling stocks or equity mutual funds that you have held for the long term will mean paying taxes on gains accrued since the market closing of January 31. If, in a year, you realise more than Rs 1 lakh of such gains, then 10.04% of that (including cess) has to be paid as tax.

How to calculate Long term capital gain from Equity shares is explained as under

The purchase price of the stock will be calculated as under

Higher of A and B will be cost of acquisition of shares.

A) Actual purchase price of share

B) Lower of following
i) Highest rate on 31.01.2018
ii) Actual sale price

The above cost of acquisition will be deducted from sale price to calculate capital gain .Flat 10 % tax will be payable on calculated amount of capital Gain.

This concessional rate of 10 per cent. will be applicable to such long term capital gains, if—
• i) in a case where long term capital asset is in the nature of an equity share in a company , securities transaction tax has been paid on both acquisition and transfer of such capital asset; and
• ii) in a case where long term capital asset is in the nature of a unit of an equity oriented fund or a unit of a business trust, securities transaction tax has been paid on transfer of such capital asset.
Indexation of the cost of acquisition (determined as per above formula) will not be allowed. Setting off cost of transfer or improvement of the share/unit will also not be allowed.

So effectively all the gains up to 31.01.2018 has been exempted under new rules . The full details has been explained by example as under.

Examples of calculations

 Number of Shares 1000 Case sale price Date Purchase Rate 450 A 1005 31.03.2018 share price on 31.01.2018 B 1020 01.04.2018 open high low closing C 800 01.05.2018 800 830 795 805 D 930 01.06.2018

 calculation of capital gain Case-1 Purchase Price 450 Sale price (31.03.2018) 1005 Gain 555 No of shares 1000 Total Gain 555000 No capital gain Applicable as 10 % Tax is applicable wef 01.04.2018  whereas shares sold on 31.03.2018

 calculation of capital gain Case-2 Purchase Price 450 Sale price (01.04.2018) 1020 Cost of acquisition as per New section Higher of Two will be cost of Acquisition A) Actual purchase cost 450 B) Lower of two (i) Highest rate on 31.01.18 830 (ii) Actual sale price 1020 830 Higher of A & B is 830 Capital gain per share 190 Total Capital gain on 1000 shares 190000 Less :Basic Exemption for LTCG 100000 Net Taxable amount 90000 Long term capital gain (10%) 9000

 calculation of capital gain Case-3 Purchase Price 450 Sale price (01.05.2018) 800 Cost of acquisition as per New section Higher of Two will be cost of Acquisition A) Actual purchase cost 450 B) Lower of two (i) Highest rate on 31.01.18 830 (ii) Actual sale price 800 800 Higher of A & B is 800 Capital gain per share 0 Total Capital gain on 1000 shares 0 Less :Basic Exemption for LTCG 100000 Net Taxable amount 0 Long term capital gain (10%) 0

 calculation of capital gain Case-4 Purchase Price 450 Sale price (01.06.2018) 930 Cost of acquisition as per New section Higher of Two will be cost of Acquisition A) Actual purchase cost 450 B) Lower of two (i) Highest rate on 31.01.18 830 (ii) Actual sale price 930 830 Higher of A & B is 830 Capital gain per share 100 Total Capital gain on 1000 shares 100000 Less :Basic Exemption for LTCG 100000 Net Taxable amount 0 Long term capital gain (10%) 0

Tip : As Rs 100000 is exempted from capital gain every year , one can sell so much of their portfolio every years so that he can earn Long term capital gain of One lakh and purchase the same shares again .

BLOGGER: 8
1. is not this tax on LTCG is valid only for the financial year 18-19(assessment year 19-20 and not for this financial year 17-18 (assessment year 2018-19)?

1. This tax is applicable from financial year 2018_19 assessment year 2019_20

2. Sir,
The 10% tax on distributed income by equity oriented mutual funds is to be paid by AMC or whom.

3. Sir,
The 10% tax on distributed income by equity oriented mutual funds is to be paid by AMC or whom.

1. It will be deducted from NAV ,means indirectly paid by unit holder

4. DEAR shri RAJA BABU your commentary on various aspect of calculation of long term capital gain is HIGHLY APPRECIATED . your further synopsis on the such complicated issue to facilitate the tax payer is welcomed.

1. thanks Veena Ji
(on behalf of Rajababu)

5. pl. let me know how to calculate LTCG for equity purchased before 1986

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SIMPLE TAX INDIA: How to calculate Long term capital gain from Equity shares
How to calculate Long term capital gain from Equity shares
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