Capital assets like bonds, stocks, property, land and other forms of assets that have been sold after a period of 36 months from its date of acquisition and the profits accrued from the sales are termed as the long-term capital gain. Capital gain tax is a tax that is levied on the profits that an investor has made by selling off his/her capital asset.
What is the new long-term capital gain tax on stocks and mutual funds?
The brand new 10% tax on the long-term capital gain on all equity stocks and mutual fund investments stands for any gain accrued from the sale of stocks or through the redemption of equity funds that have been held more than a year. In the case, where the investor has incurred a loss on the equity funds, the investor is exempted from paying that LTCG tax.
What is the rate of the new Long-term capital gain imposed on the mutual fund investments?
The long-term capital gain that exceeds the sum of Rs.1 lakh and has been accrued through the redemption of mutual fund equities, either on or after 1stApril 2018, has been deemed liable to be taxed at the rate of 10%. This also includes long-term capital gain that has been earned from the investors’ mutual fund or equity investments in the entire financial year.
What is the Carry Forward benefit of the new long-term capital gain tax?
The long-term capital loss that has resulted during sale or redemption, either on or after the 1st of April, 2018, has been allowed to be carried forward or set off. The tax is set-off against other long-term capital gains. The un-absorbed loss is now carried forward to the following eight years for the set-off against the long-term capital gains.
This tax exemption is applicable to the long-term capital gain on the total number of units that have been sold until 31st of March 2018. The losses incurred on the capital assets after that date is not allowed to be carried forward or set-off.
What happens to the liability if an investor sells the equity-based mutual funds after the 1stof April?
In order to calculate the long-term capital gain, the purchase price of the equity is to be considered and the higher amount between the actual purchase price and the amount of the lowest fair market value or actual sale price is to be taken. The final long-term capital gain will be calculated after applying the exemption of Rs.1 lakh.The amount will be calculated by reducing the price of purchase from the redemption value of the equity-based mutual funds or stocks and exemption will be applied to the sum as per the new regulations.
To get a detailed idea about the long-term capital gain and its calculation, get in touch with us today. Find out from us, how your mutual funds are being affected by the new capital tax and plan your investments accordingly to get maximum returns.