How to calculate the LTCG tax? Find the LTCG Tax Calculator Online


As of April 1, 2018, the sale of shares and equity-focused mutual funds, held for one year or more, will be subject to long-term capital gains tax (LTCG) at a flat rate of 10 percent (plus the 4 percent tax) without the benefit of indexation. This change in tax rules was proposed in Budget 2018 and subsequently enacted.

LTCG up to Rs 1 lakh per person during a financial year will be exempt. So, if your net LTCG (after fixing all qualifying losses) resulting from the sale of stocks and equity mutual funds in fiscal year 2018-19 is Rs 1.2 lakh, then you will need to pay taxes only on Rs 20,000.

As a relief for investors, if you already held your investments in stocks and mutual funds as of January 31, 2018, you will not be required to pay tax on all capital gains. The capital gains accumulated until January 31, 2018 will benefit from acquired rights and the amount of the gains on which you are liable for tax will be calculated on the basis of a formula.

In accordance with the formula, the acquisition cost of shares and equity mutual funds purchased before February 1, 2018 will be retained (for the purpose of calculating long-term capital gains / losses) as the greater of :

a) Actual cost of acquiring such an asset, and

b) Less than

(i) Fair market value of this asset

(ii) Total value of the consideration received or accrued as a result of the transfer.

Here is an overview of the meaning of each of these components.

Actual cost of acquiring such an asset

This means the actual money you paid to buy the stock or the stock mutual fund units for which the calculation is being made.

Fair market value (FMV)

According to the rules, the FMV is considered to be the ‘highest price’ of this asset on any recognized stock exchange on January 31, 2018. This means that if a share of the company XYZ Ltd, listed on the Bombay Stock Exchange ( BSE), was opening for trade at Rs 100, its closing price was Rs 99, and during the day it peaked at Rs 102, then the FMV will be considered Rs 102.

The rules further state that, if a share was not traded on January 31, 2018, then the FMV in such a case will be considered the highest traded price on the day immediately preceding January 31, 2018, at which a occurred.

For equity UCITS, the FMV will be used as the net asset value (NAV) on January 31, 2018.

Total value of the consideration received or accrued as a result of the transfer

Here you will take the amount you received from the sale of stocks and / or equity mutual funds.

Drawing

Suppose you bought 1000 shares of XYZ Ltd (publicly traded) in January 2014 at Rs 150 per share. Suppose you sold these shares in June 2018 for Rs 220 per share. The FMV of the shares as of January 31, 2018 was Rs 200.

Since you sold these shares after holding them for more than a year, any capital gains accrued on those shares will be considered LTCG. In order to arrive at the cost of acquiring such an asset, we must first determine the lowest of:

After determining the lower value between the FMV and the proceeds of the sale, you must determine the higher value of the following:

Acquisition cost

This higher value of Rs 2 lakh will be considered as your acquisition cost in order to determine the taxable long-term capital gains. The LTCG will be calculated as follows:

LTCG

The LTCG on which you have to pay tax in the example above is Rs 20,000. However, since in this case the amount is less than Rs 1 lakh, it will be exempt from tax. Keep in mind that if the total LTCG on all transactions in stocks and stock mutual funds during a financial year exceeds Rs 1 lakh, then the excess will be taxable.

In accordance with the law proposed in the 2018 budget, the LTCG resulting from the sale of shares and / or equity mutual funds by March 31, 2018 (during the 2017-2018 financial year) will remain exempt. tax.

This is how our LTCG tax calculator works.


Esther L. Steinbach

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