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.
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