The finance minister in Budget 2018 announced tax on the sale of shares if the profit crosses the value of 1 lakh. I bought 25 shares of Bajaj Finance 5 years ago on an average buy price of 150. Now their value stands at 6 lakh (with total 250 shares). If I sell all the shares and buy new shares with the amount, how will the tax be calculated? Do I still have to pay tax on the profit?

—Arvind Judge 

Beginning 1 April 2018, long-term capital gains (LTCG) arising on the sale of shares listed in India that are held for more than 12 months before sale are taxable, to the extent such LTCG exceeds 1 lakh in the given tax year, provided securities transaction tax (STT) has been paid both at the time of purchase and when the shares are sold. A special tax rate of 10% (plus applicable surcharge and cess) is payable on such LTCG exceeding 1 lakh. 

If you acquired these shares five years ago and paid or will pay STT at the time of purchase and sale, you can opt to use the highest listed price of the shares as on 31 January 2018 in place of the actual cost of purchase, provided the listed price is lesser than the sale value. The resultant capital gain, to the extent it exceeds 1 lakh, would need to be taxed at 10% plus applicable surcharge and cess. 

The reinvestment of gains/sale proceeds in the purchase of new shares does not enjoy any tax exemption. Exemption can be explored for such LTCG taxation if the sale proceeds are reinvested in a residential property in India and subject to satisfaction of other specified conditions relating to such reinvestment.

I have short-term capital loss from sale of gold ornaments and income from profession under Section 44ADA. How can I disclose this data in ITR3?

—Sadik Naniyattu

In ITR-3 form, for short-term capital loss (STCL) from the sale of gold ornaments, the details of sale consideration should be mentioned under Schedule CG, in line item 6(a)(ii) of Part A and corresponding cost of acquisition should be mentioned in line item 6(b)(i). The STCL cannot be set off against income from profession under Section 44ADA and can be carried forward (assuming the tax return is filed within the due date) to succeeding eight tax years. The STCL available for carry forward will automatically flow into Schedule CFL of ITR-3. With respect to disclosure of income from profession under Section 44ADA, the details of deemed income should be mentioned under Schedule BP, in line item 36(ii). Also, the details of the income and the nature of profession should be updated in the profit and loss and balance sheet schedules, which are earmarked for taxpayers who do not need to maintain books of accounts. 

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Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at mintmoney@livemint.com

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