As announced by FM Arun Jaitley, the long-term capital gains in equity markets will now be taxed at 10%. Under the new regime, any capital gains arising from the transfer or sale of a long-term capital asset being an equity share or a unit of an equity-oriented fund will be taxed if profits exceed Rs 1 lakh during the fiscal year 2018-19. Currently LTCG on sale of equity share /equity oriented fund was exempted.

LTCG regime till 31st March,2018

The Budget proposes that LTCG tax will have to be paid on profit booked after March 31. Sale of shares made till March, the existing law will apply and LTCG will not be applicable. So if you sell before March 31st a stock that has been held for more than a year, you do not have to pay tax. However, if you sell it on or after April 1, LTCG tax will apply on the gains.

How LTCG will be calculated after 1st April, 2018

If an investor sells stock or equity mutual fund held for over a year on or after April 1, LTCG tax will be calculated @10%.

The cost of acquisition/ Cut off price of the share or unit will be the higher of:

a) the actual cost of acquisition of the asset

b) highest price of share on stock exchange on 31.1.2018 or when share was last traded. NAV of unit in case of a mutual fund.

Capital Gain = Selling Price – Cut off Price

Different Scenario with practical example on selling of shares on or after April,2018 

Case1. An investor bought 2500 shares on 05-11-2016 at a price of Rs, 180 each. Closing price as on 31st January ,2018 is Rs. 200 and selling price is Rs. 250 on 25-04-2018.

LTCG = 2500 * (250 – 200 ) = Rs. 125000/-

Tax will be levied on (Rs 125000 – 100000*)*10% = Rs. 2500/-

(*Capital gain will be charged if amount exceeding Rs. 100000/-)

Case2 Buy Price < 31st Jan Price

Buy Price      – 100

31st Jan Price  -150

Selling Price   – 200

Capital Gain = 200 – 150 =50/ share

Case 3. Buy Price > 31st Jan Price

Buy Price       – 500

31st Jan Price  – 400

Selling Price   – 600

Capital Gain = 600 – 500 =100/ share

Case 4. Selling Price < Buying Price

Buy Price       – 100

31st Jan Price  – 150

Selling Price   – 50

Capital Loss = 50 – 100 = 50 / share 

Case 5. Selling Price < 31st Jan Price

Buy Price       – 100

31st Jan Price  – 150

Selling Price   – 110

Capital Gain = NIL*

(*Tax liability is nil even if you gain Rs. 10, because higher of buying price & cut off price is    considered.)

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Qualification: CA in Job / Business
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Location: Bangalore, Karnataka, IN
Member Since: 04 Feb 2018 | Total Posts: 1

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Tags : Budget (1957) Budget 2018 (401) Capital Gain (422) Long Term Capital Gain (154)

11 responses to “LTCG on sell of shares on or after 1st April 2018”

  1. Ramesh kumar Singh says:

    What will be the tax liability in case share is not listed in Indian stock exchanges in your above examples ? Hope you may like to answer the query.

  2. Ujjaval Desai says:

    The holding period should be more than 12 months then LTCG would attract, in the given example the holding period is less than 12 months, hence it would be STCG taxable @ 15%

    • says:

      Sir that example I have give for long term purpose but by mistake took wrong date. You can assume that case is for long term only.

  3. Mayur Pankhaniya says:

    Hello Manishji,
    if as a cost of acquisition ‘the higher of 31st jan’ price or actual cost will be taken,
    then what is the reason in CASE -04 that you have taken Rs.100 as a cost of acquisition…
    plz clarify.
    thank you

    • says:

      if the full value of consideration on transfer is less than the fair market value, then such full value of consideration or the actual cost, whichever is higher, will be deemed to be the cost of acquisition.

      • sanju says:

        Fair market value is to be taken as the “Intra day high value” touched on 31-01-2018, it is clarified by the Min of Finance, CBDT vide notification no.F.No. 370149/20/2018-TPL Dated 4th February, 2018

  4. venkat says:

    how to find the max sale value of share on 31 Jan 2018 after one or two or more years

  5. RAVI KUMAR says:

    In case 1, you have taken date of purchase as 05-11-2017. The date of sale is taken as 25.04.2018.
    So period of holding is less than 12 months.
    How LTCG is applicable?
    It is STG..
    Pl clarify..

  6. Suresh Deshmukh says:

    What about shares got out of IPO in 1978 when there was no Demat account?

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