Sir,
I am told that income tax on short term capital gains on sale of equity shares before expiry of one year from the date of purchase, will be levied at uniform rate of 15% of the gains irrespective of the tax slab of the assessee. Does it mean that the short term capital gains will not be included in the taxable income which will otherwise affect the tax slab?
I am also told that if the assessee's income falls below the exemption limit of Rs.2,50,000 (Rs,300,000 in case of senior citizens), then the short term capital gains will be added to the income to derive the benefit of exemption upto the threshold level.
If this is true, are not both contradictory? Please examine and advise. This clarification will benefit several assessees like me.
1 Answers
Hi,
Yes, the STCG on sale of equity shares are taxed at 15% irrespective of the individual's tax slab rate. Kindly note that STT (Securities Transaction Tax) is also applicable on all equity shares which are sold/bought on stock exchanges.
if other income excluding this short- term capital gains is less than basic exemption limit, you will be entitled to take the benefit of such shortfall in the basic exemption limit while calculating your tax liability. Let's consider an example;
Suppose your taxable income is Rs.300000 and STCG is Rs.80000 then the amount of deduction is = exemption limit- (taxable income-STCG) =250000-(300000-80000) = Rs.30000.
So the amount of capital gain tax to be paid on Rs.50000 (80000-30000).
In case your taxable income including STCG is below exemption limit then you are not liable to any tax.
Suppose your taxable income is Rs.300000 and STCG is Rs.80000 then the amount of deduction is = exemption limit- (taxable income-STCG) =250000-(300000-80000) = Rs.30000.
So the amount of capital gain tax to be paid on Rs.50000 (80000-30000).
In case your taxable income including STCG is below exemption limit then you are not liable to any tax.
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