Home >Money >Q&A >Long-term capital gains exceeding 1 lakh from sale of listed shares taxed at 10% in a year
Photo: iStock
Photo: iStock

Long-term capital gains exceeding 1 lakh from sale of listed shares taxed at 10% in a year

  • The resultant LTCG to the extent it exceeds 1 lakh is taxable in your hands at 10% (plus applicable surcharge and cess)
  • To claim a deduction under Section 80C, within the overall limit of 1.5 lakh, an HUF can contribute to the PPF account, in the name of any 'member' thereof

I took voluntary retirement scheme (VRS) in 2003, and employee stock option plans (Esops) were issued to me under the scheme. I have been holding these shares all this time. Will there be any tax implication if I sell these shares?

—Vijay

It is assumed that the shares held are listed and no discount or benefit was offered by the employer at the time of allotment. As the shares were held for over 12 months from the date of allotment, the gains arising out of the sale would be taxable as long-term capital gains (LTCG) in your hands.

Beginning 1 April 2018, LTCG on the sale of listed shares is taxable to the extent such LTCG exceeds 1 lakh in the given tax year. The cost for computation of LTCG shall be the highest listed price of the shares as on 31 January 2018 (in place of the actual cost of purchase), provided the listed price as on 31 January 2018 is lesser than the sale value. However, where the sale value is less than the listed price as on 31 January 2018, the cost for the purpose of computation of LTCG shall be sale value or actual cost, whichever is higher.

The resultant LTCG (along with other LTCG on listed shares and units of equity-oriented mutual funds) to the extent it exceeds 1 lakh is taxable in your hands at 10% (plus applicable surcharge and cess). A rollover exemption can be sought by you against this LTCG under Section 54F of the Income-tax Act by purchasing or constructing a residential house property in India, subject to the prescribed conditions and timelines.

I am the karta of a Hindu Undivided Family (HUF), which has two males and two females. We all have our respective Public Provident Fund (PPF) accounts and are contributing 1.5 lakh every year. Can I, as the karta of the HUF, open another PPF account in my name for which contribution will be made from the account of the HUF? Can an HUF claim Section 80C benefits under the Income-tax Act while filing tax returns?

—Name withheld on request

Note that pursuant to notification number GSR 291(E) dated 13 May 2005 from the ministry of finance, PPF accounts can no longer be opened in the name of an HUF or the karta of an HUF. To claim a deduction under Section 80C, within the overall limit of 1.5 lakh, an HUF can contribute to the PPF account, in the name of any “member" thereof.

This is, however, subject to the overall contribution limit of 1.5 lakh in such individual member account, in case the members are also contributing to the same account.

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

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