Impact of 2018 budget on long term capital gain

Would like to know following,
1.Whether long term capital gain made before 2018 budget is taxable?
2.Whether expenses incurred such as broker’s charges can be deducted in computation of taxable component of long term capital gain.

Hi bjgupta,

The Finance Minister has proposed grandfathering of LTCG up to January 31, 2018. Any incremental LTCG after that will be counted as LTCG for the new tax. Grandfathering is defined as exempting something from a new law or regulation.

As for LTCG made in Financial Year 2017-18 (i.e sale up to March 31, 2018), there is no tax. However, any sale made after April 1, 2018, will be liable to the new LTCG tax. One needs to segregate this LTCG into two parts:

Part 1: LTCG made up to January 31, 2018. This will be the highest price of the stock on January 31, 2018, minus the cost of acquiring stock;
Part 2: LTCG made after January 31, 2018. This will be sale price minus the highest price of the stock on January 31, 2018.

While Part 1 will be exempt, Part 2 that will be assessed as LTCG (it can also be a capital loss) for tax, which will be computed at the rate of 10% (+ cess of 3%) only if exceeds Rs. 1 lakh.

As far as we know, you can deduct the charges incurred for sale of shares while calculating capital gains. This includes brokerage charges, registry charges or other expenses made on the asset sale.

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BB Expert

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