STCG and LTCG Taxation

Income Tax Income from Capital Gains
1

Hello, I’m a little confused in taxation related to short term and long term capital gain tax from equity and debt n other securities.

Equity related STCG is taxed at 15% even if your tax slab is different %. Here, say if my total income from business is 4L and STCG profit is 1L. Then total taxable income will be 5L?
In which 1.5L will be taxed @ 5% and the STCG profit will be taxed @ 15%?

After all this, net payable tax will be 7500+15000 = 22500?
In this, can Section 87A rebate be taken? If yes, will it reduce the tax by 12500, making payable tax = 10000?

  1. Out of these 4, whose income can be considered for rebate under section 87a? STCG n LTCG fr equity related and debt/security related?

  2. Another scenario, if total business income is 4.5L and STCG profit from equity is 2L. Here total taxable income will reach 6.5L?
    How will tax be computed in this scenario?

Please help!

@TeamQuicko @Divya_Singhvi

2

Hi @FalconZex

  1. Yes you are right the tax payable shall be 10,000 INR
  2. Rebate is applicable on total tax liability Section 87A does not exclude any income specifically.
  3. In such a case no rebate shall be available. The tax rate shall be as under:

  • On business income of 2 lakhs INR: 5%

  • On STCG of 2 lakhs INR: 15%

You can also refer to our Income Tax Calculator

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3

I have income Short Term and Long term Capital gains and “Income from other sources” (Bank interest and Dividend). Also, I have investments in 80C, 80D, 80CCD.
Are the investments in 80C, 80D, 80CCD considered for tax deduction?
For example if income from other source is 1 lac and 80C investment is 1lac, will this 1 lac be exempt?
STCG is 3.5lac, so 15% will be applicable on 1 lac. as 2.5 lacs is exempt.
so i pay tax only 15% of 1 lac which is Rs.15000.
please assist

4

Hey @Yasmin_Menon

Your are absolutely correct.

Deductions, if any, will be reduced from your Income taxable at slab rates.
The un-exhausted part of the basic exemption limit of 2.5 lakhs will be reduced from you Capital Gains.

So, in the above case you’ll have to pay 15% tax on 1 lakh.

However, if your taxable income after deductions is upto 5 lakhs, you’re eligible for rebate (12.5k) under section 87A.

Hope this helps. :slight_smile:

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5

Just to reconfirm,
income from other source (FD Interest and dividend) is 1 lac and 80C investment is 1lac, will this 1 lac be exempt and will not be calculated under taxable income?

6

Yes, this 1 lac will not be taxable after deductions.

7

Hey @Yasmin_Menon

Deductions under Chapter VI-A can be claimed against taxable incomes. Based on your data, here is a calculation:

Gross Total Income = 1 lac (IFOS) + 3.5 lac (STCG) = 4.5 lac
Deduction 80C = 1 lac
Total Income = 3.5 lac
Special Rate Income = 3.5 lac
Adjusted against basic exemption limit = 2.5 lac
Taxable Special Rate Income (STCG) = 1 lac
Tax on STCG = 15% of 1 lac = 15,000
Rebate u/s 87A = 12,500
Net Tax Liability = 2,500
Cess = 4% of 2,500 = 100
Total Tax Liability = 2,600

8

Hi Team,

I am a salaried person and I do have some short term equity trading gains also.
My income from

  1. salary and fixed deposits is 10 Lacs (after deducting all 80 c, 80 D related investments) and
  2. income from short term equity capital gains is around 1 lac.

Before filing ITR, I need to understand, how I will be taxed in old tax regime.

  1. Will the income of 1 lac from short term equity trading be added in the income from salary as a whole and thus total taxable income be like 11 lacs and then the tax slab rates will be applied?

or

  1. Will the income of 1 lac from short term equity trading be taxed separately at 15 % and then the remaining amount of 1 lac - 15K = 85K be added in the income from salary? e.g. in my case now my total income after the short term capital gain tax will be 10 lac 85K and now I need to pay taxes as per applicable tax slabs.
    If this is the case then am I not being taxed twice on the income from short term equity trading?

Thanks in advance for your response.

Thanks,
Vikash

9

Hey @click2vikash

Here’s how you’ll be taxed under the Old Regime:

Total Income = 11 lacs
Income Taxable at Slab rates = 10 lacs
Income Taxable at Specified rates = 1 lakh

Tax on Slab Rate Income = 1,12,500
Tax on STCG = 15,000

Total Income Tax = 1,27,500
HEC = 5100
Total Tax Liability = 1,32,600

Hope this helps :slight_smile:

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10

Thanks @vinith.r for confirming !

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11

I bought shares worth INR 70,000 in 2017 which are now worth around INR 1,80,000. It is long term capital gains, how much tax do I have to pay?

12

To differentiate capital gains into long term and short term the period is 36 months and 12 months - which one to consider?

13

Hey @Tanmay_mehta,

In Budget 2018, the grandfathering rule was announced u/s 112A which implies that - long term capital gains above INR 1 Lakh will be taxed at 10% after 1st Feb 2018.
Therefore to calculate LTCG:

  • Take the equity value as on 31st Jan 2018 to be X
  • so LTCG = Sales price - value as on 31st Jan 2018
  • LTCG = 1,80,000 - X

Any tax on LTCG will be 10% above INR 1 Lakh

  • LTCG below INR 1 Lakh is fully exempt
  • LTCG above INR 1 Lakh will be taxable at 10% for the amount above INR 1 Lakh only.

Hope this helps!

Refer to our learn article on LTCG on sale of Equity Shares and Equity Mutual funds

14

Hey Kunal,

For capital assets like Equity & preference share, Debentures & Government securities, Units of UTI and equity-oriented mutual funds and Zero-Coupon Bonds where STT is paid

  • If such assets are sold within 12 months of purchase, it is considered short term capital gains
  • If assets are held for more than 12 months, it is considered long term capital gains

However, the holding period is 36 months for other capital assets like house property, machinery, vehicles, etc

You can refer to Capital Gains guide on our learn center.

15

Hi @Ridhima_Sharma @TeamQuicko

I bought 500 shares at 100 rupees each on May 05, 2020, thereby investing 50,000 in a company. When the share price appreciated to Rs. 200 each, I sold 250 shares on Feb 15, 2021, thereby taking my initial investment of 50k.

As I have ONLY taken my initial investment out & not profit, will I be taxable under STCG ?

Pl advise

16

Hey @Abdul_Kaleem_shah, yes, you will have to file ITR 2 as the income you have received from selling the shares is considered as capital gains income and since you have sold it before holding them for 12 months it will be considered as STCG. You can read more about capital gains from here:

17

thanx @Maharshi_Shah for prompt response.

1 Like
18

Hi,
My LTCG on mutual fund are to tune of 60k. However while filling the ITR2, it is asking the qtrly value to be be filled . Where can i get the quarterly gain earned to fill in ?

19

Hi @Yantra_74
Quarterly Break up of Capital Gains is required while filing ITR 2. You need to enter the Gains in the quarter when you sold the mutual funds and Gains were realized.

20

Received the loss/gain details in consolidated statement Summary from CAMS. But they are not adding up to the actual LTCG value. Ihave losses and gains too. So am now confused how to match to the value.

Can i randomly put any value in each of those 5 quarters, however ensuring the sum of all qtrs add up to actual LTCG value ?