We all know that rate of Income Tax are announce during budget session, every year. It may be differ for different entities, like Individual and Hindu Undivided Family, Firms, Company etc. Over and above these rates there are certain special rate of tax, which are as under.
Short term Capital Gain: (Section 111A)
(1) Where the total income of an assesse includes any income chargeable under the head “Capital Gains”, arising from the transfer of a short term capital asset, being an equity share in a company or a unit of an equity oriented fund [or a unit of a business trust] and –
(a) the transection of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No.2) Act, 2004 comes in to force; and
(b) such transection is chargeable to securities transaction tax under that Chapter,
tax payable by the assesse on the total income shall be the aggregate of-
(i) the amount of income tax calculated on such short term capital gains at the rate of [fifteen] per cent; and
(ii) the amount of income tax payable on the balance amount of the total income as if such balance amount were the total income of the assesse:
On the base of these, in the following cases on short term capital gain tax will be levied @ of 15%.
(1) Equity Shares of Company,
(2) Units of Equity Oriented Fund,
(3) Units of Business Trust
Provided that on such transections security transection tax has been paid
On other short term capital gain regular tax will charged.
As per Section 2(42A), “short term capital asset” means a capital asset held by an assesse for not more than thirty six months immediately preceding the date of its transfer.
Following are the exceptional cases where period of 36 months is to be considered as 12 months.
1) any security listed under Stock Exchange
2) unit of any equity oriented fund
3) unit of Unit Trust of India
4) Zero coupon bond
Over and above this in the exceptional cases where period of 24 months is to be considered.
1) shares of unlisted company
2) land and buildings
LONG TERM CAPITAL GAINS: (SECTION 112)
(1) Where the total income of an assesse includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head “ Capital Gains”, the tax payable by the assesse on the total income shall be the aggregate of,-
(a) in the case of an individual or a Hindu Undivided Family,(being a resident)
(i) the amount of income tax payable on the total income as reduced by the amount of such long term capital gains, had total income as so reduced been his total income; and
(ii) the amount of income tax calculated on such long ter capital gains at the rate of 20%.
(b) in the case of a domestic company,
(i) the amount of income tax payable on the total income as reduced by the amount of such long term capital gains, had the total income as so reduced been its total income; and
(ii) the amount of income tax calculated on such long term capital gains at the rate of 20%
(c) in the case of a non-resident or a foreign company,
(i) the amount of income tax payable on the total income as reduced by the amount of such long term capital gains, had the total income as so reduced been its total income; and
(ii) the amount of income tax calculated on long term capital gains at the rate of 20%; and
(iii) the amount of income tax on long term capital gains arising from the transfer of a capital asset, being unlisted securities.
(D) in any other case(of a resident):
(i) the amount of income tax payable on the total income as reduced by the amount of long term capital gains, had the total income as so reduced been its total income; and
(ii) the amount of income tax calculated on such long term capital gain at the rate of 20%.
Long term capital assets is to be considered as per section 2(29AA) of the income tax act, which is not a short term capital gains. Accordingly any assets which is held for more than 36 months, is considered as long term capital gain. But in the following cases, if the capital assets are held for more than 12 months be considered as long term capital assets.
1. Any securities listed under any Stock Exchange
2. Unit of any equity oriented fund
3. Unit of Unit Trust of India
4. Zero coupon bond
Over and above this in the exceptional cases where period of 24 months is to be considered.
1. Shares of unlisted company
2. Land and buildings
Long term capital gains more than Rs. 1,00,000 Section 112A:
Long term capital gain on transfer of any equity shares or units of equity oriented fund or units of business trust, on which securities transaction tax is paid, is exempt up to 31st March, 2018. But if transfer after 1st April, 2018 and capital gain is more than Rs. 1,00,000, tax at the rate of 10% is payable under section 112A of the income tax act.
31st January, 2018 will be the date for considering fair market value, for calculation of cost of acquisition. Fair market value up to 31st January, 2018 capital gain will not applicable. 31/01/2018 is known as Grand Fathering Date, also.
Calculation of cost of acquisition as on 31st January, 2018, fair market value is to be considered as under:
01. In the case of Quoted Shares/Units: If the share or unit is listed on any stock exchange, maximum value on 31st January, 2018 is to be considered as fair market value. If the trading of any share or unit has not been made on 31st January, 2018, immediate previous date on which trading has done is to be considered as fair market value.
02. In the case of no listed units: If the unit is not listed at any stock exchange, net asset value of this unit as on 31st January, 2018 is to be considered as fair market value.
03. Shares are not listed on 31st January, 2018 but listed on the date of transfer: If the shares are not listed on 31st January, 2018, but at the time of transfer of shares it is listed then up to financial year 2017-18 index cost is to be considered and fair market value as on 31st January, 2018 is to be calculated as under:
Cost of Acquisition X Cost inflation Index of 2017-18 i.e.272
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Cost of Index of purchase year or cost of index of 2001-02 whichever is earlier .
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