Ans.
Since period of
holding of the shares is more than 12 months, capital gain shall be treated as
long term capital asset. As per provisions of the Act, LTCG on sale of shares, listed
on recognized stock exchange and on which STT is paid is taxable @10% on LTCG,
subject to said LTCG upto Rs. 1 Lakh being exempt from tax. However, for
securities purchased before 1 February 2018 and sold after 31 March
2018, all gains up to 31 January 2018 will be grandfathered i.e. would be
exempt from tax. Further, no benefit of indexation shall be available on such
sale.
Example:
Purchase Cost of
share on 1 January 2017: Rs. 50
Fair Market Value
(‘FMV’) as on 31 January 2018: Rs. 100
Sale Value on 30
April 2019: Rs. 110
Computation of
LTCG shall be as follows:
Particulars
|
Amount
|
Amount
|
Actual
Sale Value
|
|
Rs. 110
|
Cost of
Acquisition:
(higher of
1 and 2)
|
|
Rs. 100
|
1.Purchase Cost
|
Rs. 50
|
|
2.
Lower of (a) and
(b)
(a)
Actual Sale
Value Rs.110
(b)
FMV as on 31
January 2018 Rs.100
|
i.e. Rs.100
|
|
LTCG
|
|
Rs.10*
|
Note:
The benefit of FMV as on 31 January 2018 is
available for only those shares which are purchased before 1 February 2018.
The FMV of the share shall be the highest trading
price on the recognized stock exchange as on 31 January 2018.
*As per the relevant provisions of the Act, all
capital gains upto 31 January 2018 are exempt from tax. Accordingly, in the
above example, one may find that out of total capital gains of Rs.60 i.e.
(110-50), gains to the extent of Rs. 50 i.e. (100-50) upto 31 January 2018 is
exempt from tax and balance gains of Rs. 10 i.e. (110-100) is chargeable to tax
at 10%. However, no benefit of indexation shall be available on such sale.