Equity, Equity MF: Long Term, Short Term Capital Gains..!

Equity Shares, Equity MF: 

Long Term Capital Gains,

Short Term Capital Gains

Long-term capital gains on transfer of equity shares / units in cases covered by securities transaction tax [ Sec.10 (38) ] – Long term capital gains arising on transfer of equity shares or / units of equity oriented mutual fund is not chargeable to tax from the assessment year 2005-06 if such transaction is covered by securities transaction tax.

“Equity oriented fund” will be a fund where the investible funds are invested by way of equity shares in domestic companies to the extent of more than 65 percent (up to May 31, 2006, it is 50%).

Therefore if the balanced funds have more than 65% invested in equity shares in Domestic Companies & the units have been held for more than one year then there will be no tax.

If the units are held for one year or / less then the Short term capital gains will be taxed at 15 per cent (Plus surcharge + Education Cess + Secondary & Higher Education Cess).

Otherwise tax will calculated based on whether the period of holding is more than one year or not. If it is more than one year then tax is 20 per cent (Plus surcharge + Education Cess + Secondary & Higher Education Cess) on difference between Sales proceeds and the Indexed Cost.

If the benefit of indexation is not availed then long term capital gains is taxable at the rate of 10 % (Plus Surcharge + Education Cess + Secondary & Higher Education Cess).

If the units are held for one year or / less then the capital gains will be included in the total income & tax will be calculated based on slab.

Share: