The Income Tax Act in India specifies various tax rates applicable to different types of income. This article explores the rates for Short Term and Long Term Capital Gains, along with special rates for specific incomes like lottery winnings and anonymous donations.
Under certain circumstances special rate of income tax are applicable, the detail is given below. Surcharge is applicable separately.
Short term Capital Gain (Section 111A):
Under the following circumstances Short Term Capital Gain Tax is applicable @15%.
01. Equity Shares of Company,
02. Units of any Equity Oriented Fund, and
03. Units of any Business Trust.
For this one condition is there, that on these transactions, Securities Transactions Tax (STT) has to be paid. If on any transection STT has not paid tax will be charged @20%.
As per Section 2(42A), “short term capital asset” means a capital asset held by an assesse for not more than 36 months immediately preceding the date of its transfer. But there are some exceptions, given below on which time period of 36 months is reduced to less than 12 months.
01. Any security listed in any Stock Exchange,
02. Units of any Equity Oriented Fund,
03. Units of Unit Trust of India, and
04. Zero Coupon Bond.
Over and above this under the following cases time period of 12 months is to be considered as 24 months or less.
01. Shares of unlisted Company
02. Immovable Property i.e. Land and Building.
Long Term Capital Gain (Section 112):
As per definition given under section 2(42A) of short term capital gain, accordingly any assets is held by an assesse for more than 36 months will considered as Long Term Capital Assets.
Under the following circumstances if the capital asset is held by an assesse for more than 12 months, will considered as long term capital asset.
01. Any security listed under Stock Exchange,
02. Units of any Equity Oriented Fund,
03. Units of Unit Trust of India, and
04. Zero Bond Coupon.
Under the following circumstances if the capital asset is held by an assesse for more than 24 months, will considered as Long Term Capital Asset.
01. Shares of unlisted company,
02. Immovable Property i.e. Land and Building.
Tax on Long Term Capital Gains in certain cases:
(Section 112A)
31st the head “Capital Gains”, arises from the transfer of long term assets being an equity share in accompany or a unit of an equity oriented fund or a unit of a business trust on which Securities Transection Tax has been paid, the capital gain arises on this transaction was exempt up to 31st March, 2018.As per the amendment made by Finance Act, 2018, from 1st April, 2018 if the gain is more than Rs. 1,00,000 capital gain will charged @10%.
31st January, 2018 will be the date for cost of acquisition:
In the case of quoted shares or units and are listed at any stock exchange fair market value of that asset is to be considered. If there was no trading of that asset on 31st January, 2018, the value is to be considered of last transection before 31st January, 2018.
If any units are not listed, then net asset value of that unit is to be considered as fair market value.
Winning from lottery or games: Section 115BB:
As per section 115BB, income earn by winning from following activities, rate of tax will be 30%.
01. Winning from Lottery,
02. Winning from Cross Word Puzzle,
03. Winning Horse race or any kind of rase,
04. Winning from playing card or any other game, and
05. Winning from any kind of gambling.
Anonymous Donation Section 115BBC:
As per Section 13(7), anonymous donation means, donation received by a trust without name and address of donor. On this type of donation tax will be levied @30%. After assessment year 2010-11, if the amount of anonymous donation is in excess of Rs.1,00,000 or 5% of total donation received by trust whichever is higher 30% of rate will apply. Under the following cases this provision will not apply.
01. Trust registered u/s 11,
02. Any University or Education Institute registered u/s 10(23C)(iiiad) and (via),
03. Any Hospital or other institution registered u/s 10(23C)(iiiac) and (via),
04. Any fund or institution established u/s10(23C)(iv),
05. Any trust or institution established u/s10(23A)(v)
06. Totally religious trust,
07. Religious or charitable trust.
There are other types of income on which different rate of tax is applicable like income u/s 68, 69, 69A, 69B, 69C and 69D, Minimum Alternate Tax, u/s 115JB etc.
Conclusion : Understanding the different rates of tax under the Income Tax Act is crucial for taxpayers and financial planners alike. From varying rates on short term and long term capital gains to special taxes on lottery winnings and anonymous donations, these provisions impact financial decisions significantly. Compliance with these tax rates ensures adherence to legal requirements and effective financial planning strategies.
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