5 Feb 2018

LTCG: The Burning heat to wealthy Investors

Finance feed by:

CA Akash Agarwal
B.com (Hons),CA
CA in Practice    •    100% (2 votes)   •    14 Year 4 Month  experience

The Union Budget had more of turning points to Global investors then some relieve from tax point of view.

Let us have more clarity on levy of LTCG

What are long term capital gains (LTCG) in equities?
Any profit or gain made after holding shares for more than one year is known an long term capital gain. For example, if one invests in ABC stock at Rs 1000 on 1 Jan 2017 and sold the same at Rs 1500 after 1 Jan 2018, the gain of Rs 500 is termed as long term capital gains.

How will the investors be taxed?
If an investor holds shares for more than a year, he will be taxed at 10 per cent, if the gains exceed Rs 1 lakh. Short term provisions remain unchanged.

Will people who are already invested be taxed? How?
Marginal gains will be taxed. Gains up to 31 Jan 2018 will be exempt. A stock bought at Rs 1000 on Jan 1, 2016 hits a high of Rs 1700 on Jan 31, 2018. If the same is sold on Apr 2, 2018 for Rs 200o, the long term capital gain will be Rs 300 (As the highest price of Rs 1700 will be the purchase price). And the LTCG tax will Rs 30 plus surcharges.

Do mutual fund investors have to pay long-term capital gains tax?
Yes, investors in equity-oriented mutual funds have to pay long-term capital gains tax. Any Long Term Capital Gains (LTCG) over Rs 100,000 per year on Equity Mutual funds will now be taxed at 10 percent. Dividends will be taxed at 10 per cent.

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