Long term capital gain
- A long term capital gain is the gain from selling an asset, after holding it for more than 12 months.
- India levied a 10 percent tax on long term capital gains above Rs. 1,00,000 from the sale of equity shares.
A long term capital gain is the gain from selling an asset, after holding it for more than 12 months.
Long term capital gains in India are taxable at the rate of 10 percent, without providing the benefits of indexation.
When an individual sells his\her investments such as stocks, bonds, real estate, and commodities to earn some profits, this profit is known as a capital gain. Some governments levy tax on such assets, which are held for a more extended period. For the long term, this period should be more than twelve months. India levied a 10 percent tax on long term capital gains above Rs. 1,00,000 from the sale of equity shares. LTCG tax may differ for different types of assets such as real estate, equity shares, bonds, etc.
LTCG in India
The union budget reintroduced a tax on gains obtained by selling long term capital, an asset which was held for more than one year. The government charges a 10% tax on profits earned above Rs, 1,00,000 from the sale of equity shares. It was abolished in 2005, but many stockholders were demanding to bring it back.
How is LTCG calculated?
The first full value of the asset transacted, i.e., the total sale value of an asset is determined. The expenditure incurred in such a transaction, indexed cost of acquisition, index cost of improvement, and if any exemptions were available, these three values are deducted from the total sale value of an asset. The result obtained is the taxable long term capital gains. Expenditure incurred means, if an individual sells a house, then brokerage or commission paid, cost of stamp duty or travel expenses related to transfer can be considered as expenditure incurred on the sale. In the case of shares, it can be stockbroker’s management fees or commission.