LTCG on Indian equity shares are tax exempt
I want to sell my house in Bengaluru, India, and reinvest it by buying a house in the UK where I live. How will I be taxed?
Sale of property situated in India will be taxable in the same year. An immovable property held for more than 36 months is classified as a long-term capital asset, otherwise it is considered as a short-term capital asset. While capital gain on sale of a long-term capital asset is subject to tax at 20% (excluding surcharge and education cess), short-term capital gain (STCG) is taxable at progressive rates of 10-30%.
Long-term capital gain (LTCG) can be claimed exempt to the extent it is re-invested in India in specified bonds or a residential house (to be either purchased within 2 years, or constructed within 3 years of transfer of the land). But there are certain restrictions on the sale of new house bought and the quantum of investment made in bonds. If is capital gain is not invested until the due date of filing of tax return in India (i.e., 31 July), you may put the amount of capital gain in a Capital Gain Account Scheme (CGAS) with a bank (not later than the due date of filing returns), and subsequently withdraw this amount for re-investment.
If the entire amount is not reinvested or deposited in CGAS, the remaining portion of the gain will be taxable. In your case, if you re-invest the amount in the UK, there will be no exemption from tax available in India. Tax on LTCG can be either paid by way of advance tax in four instalments (15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March) or before filing a return along with interest by 31 July.
I own a few p hysical shares of companies listed in India and would like to sell them now. How will this be taxed?
Capital gains from sale of shares of an Indian company are taxable in the hands of an individual. Since the shares are listed on a recognised stock exchange in India, the capital gains will be classified as long-term if held for more than 12 months. If shares are held for less than 12 months, the gains would be termed as STCG. Dematerialisation of listed shares has been made mandatory for trading.
But you may continue to hold the shares in physical form. If the shares are dematerialised and sold through a stock exchange, securities transaction tax (STT) would be applicable. LTCG from sale of listed Indian equities are tax exempt if STT is paid on sale of such shares.
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