How do I calculate tax on my net LTCG?
2 min read 15 Jan 2023, 10:12 PM ISTLTCG income, exceeding ₹1 lakh, arising from sale of equity shares shall be taxable @ 10% under section 112A of the Income-tax Act, 1961.
PremiumThis year, I made long-term capital gains (LTCG) of ₹7.6 lakh by selling shares of a company. Meanwhile, I also incurred a loss of ₹3,30,179 by selling shares of another company. The net profit from the sale of these shares is ₹4,29,154. How much tax will I need to pay?
My purchase price of a share was ₹400 and its fair price value as on 31 March 2018 was ₹150. Today, the price of this share has plunged to ₹80. Which amount do I need to consider for filing my income tax returns if I sell the share today?
—Subramanian SGSR
Based on the limited information provided by you, it is assumed that you are a resident individual (below 60 years of age) and have earned Net Long Term Capital Gain (LTCG) from sale of listed equity shares.
Further, it is assumed that the prescribed taxable income threshold of ₹250,000 is already exhausted on account of other incomes.
In view of the above, the LTCG income, exceeding ₹1 lakh, arising from sale of equity shares shall be taxable @ 10% [plus applicable surcharge, if any (maximum of 15% if total income exceeds ₹1 crore) and education and health cess @ 4% on tax and surcharge] under section 112A of the Income-tax Act, 1961.
Where shares were acquired prior to 1 February 2018, as provisions of Section 55 of the Act, the cost of acquisition shall be higher of the following:
(i) actual cost of acquisition;
(ii) lower of (a) fair market value (FMV) of shares as on 31 January 2018 (as determined per the prescribed manner); (b) full value of consideration.
In the instant case, you have shared the FMV of the shares as on 31 March 2018 instead of 31 January 2018. Assuming that the FMV as on 31 January 2018 is same as ₹150, the cost of acquisition for the purpose of computing the LTCG will be ₹400 (as explained above).
I will be 80 years old in mid-January. Am I entitled to avail the exemptions available to the super senior citizens under the Income Tax (I-T) Act during FY 2022-23 or will the same be applicable from FY 2023-24?
—Name withheld on request
As per the provisions of First Schedule to the Finance Act, a resident individual is considered to be a super senior citizen if such taxpayer is of 80 years of age or more at any time during the Financial Year (FY) (i.e. the period of 12 months commencing on 01 April to the following 31 March).
In the instant case, as you will complete 80 years of age in mid-January (i.e., during the FY 2022-23), you will be considered as a super senior citizen for FY 2022-23 and onwards. Accordingly, you can claim the benefits available to super senior citizens from FY 2022-23 onwards.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.
