Can I avail tax rebate for long run capital beneficial properties on listed shares?

Question: I’m a resident of India. I had acquired some shares greater than 20-25 years again when there was no Securities Transaction Tax (STT). I’ve bought these shares with a revenue of Rs. 1,40,000/- on which STT has been paid. How the long run capital beneficial properties will likely be computed in respect of those fairness shares? Since my complete taxable revenue together with the above long run capital beneficial properties after the preliminary exemption is lower than ₹5 lakhs so I really feel I do not need to pay any tax in view of the rebate below Section 87A. Please verify.

Answer: Equity shares of corporations listed on the Indian Stock trade are handled as long run capital property if the identical is bought/transferred after having held for a couple of yr. Any earnings made on switch of such long run capital asset is named long run capital beneficial properties (LTCG). Such LTCG is taxed at a flat price of 10% after an preliminary exemption of 1 lakh yearly supplied securities transaction tax (STT) has been paid in respect of buy and sale of such shares. While computing the long run capital acquire in respect of listed fairness shares, you aren’t entitled to take the good thing about the Cost Inflation Index. Since the shares had been acquired earlier than STT was launched and since you might have already paid STT on the time of sale of those shares, you’re coated below Section 112A. In respect of shares that had been acquired earlier than 31 st January 2018, the market worth of such shares on 31 st January 2018 shall be taken as the price of such shares and thus any revenue accrued until 31 st January 2018 on such shares comes tax-free in your palms.

As far as your query of rebate below Section 87A is anxious, you’re eligible for a rebate below Section 87A since your complete taxable revenue is lower than the edge restrict of 5 lakhs. However, you’ll have to pay tax on the price of 10% and fewer on ₹40,000 (steadiness LTCG after preliminary exemption of 1 lakh).

Balwant Jain is a tax and funding skilled and might be reached at jainbalwant@gmail.com and @jainbalwant on Twitter.

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