Tax calculation on long-term capital gains as per section 112A

Tax calculation on long-term capital gains as per section 112A

Tax Calculation on long-term capital gains as per section 112A
Exemption for long-term capital gains arising from transfer of listed securities as referred to in Section 10(38) has been withdrawn by the Finance Act, 2018 w.e.f. Assessment Year 2019-20 and a new section 112A is introduced in the Income-tax Act. As per Section 112A, long-term capital gains arising from transfer of an equity share, or a unit of an equity oriented fund or a unit of a business trust shall be taxed at 10% (without indexation) of such capital gains. The tax on capital gains shall be levied in excess of Rs. 1 lakh.
 
The amount of income-tax calculated on such long-term capital gains exceeding one lakh rupees at the rate of ten per cent

To understand the calculation of 112a  we have to understand the  concept of grandfathering 
The cost of acquisitions of a listed equity share acquired by the taxpayer before February 1, 2018, shall be deemed to be the higher of following :- 
a) The actual cost of acquisition of such asset; or

b) Lower of following: -

(i) Fair market value of such shares as on January 31, 2018; or
(ii) Actual sales consideration accruing on its transfer.

The calculation of 'cost of acquisitions' has been further explained by way of the following example in software -


Go into transactions → Capital Gain Head → select Type of asset equity/ preference share or equity oriented mutual funds or units of the business trust.









Cost of Acquisition (COA)


Higher of –

Actual COA i.e. Rs. 1000, and  

Lower of –
FMV on 31.1.18 i.e. Rs. 400000, and
Sale Consideration  i.e. Rs. 300000
Hence, COA = Higher of (Rs. 300000 or Rs. 1000 (Actual COA)) = Rs. 300000




Tax on long-term capital gains as per section 112A

Go to Forms  > Computation 





long-term capital gains covered under section 112A are not taxable up to Rs 1 lakh per financial year. The gains exceeding Rs 1 lakh are liable to tax at 10% plus education cess and applicable surcharge.
Total 112a income = 200000
tax at 10 % up to 1 lakes 
tax u/s 112a  = 10000

In case of any doubt, please refer to relevant provisions of the Income-tax Act


    • Related Articles

    • SECTION 54 EXEMPTION FOR CAPITAL GAINS

      SECTION 54 EXEMPTION FOR CAPITAL GAINS A person wanted to shift his residence due to certain reason, hence, he sold his old house and from the sale proceeds he purchased another house. In this case the objective of the seller was not to earn income ...
    • Section 112A – Income Tax on Long Term Capital Gain

      Introduction to Section 112A – Income Tax on Long Term Capital Gain  Vide Finance Bill 2018, the Government has come up with an insertion to section 112A under the Income Tax Act, 1961.  The new section 112A has been inserted in order to levy ...
    • Deprecation calculation as per companies act 2013 in Income Tax

      Deprecation calculation as per companies act 2013 Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, ...
    • SECTION 54 F EXEMPTION FOR CAPITAL GAINS

      SECTION 54 F EXEMPTION FOR CAPITAL GAINS 54F. Capital gain on transfer of certain. capital assets not to be charged in case of investment in residential house.—(1) Where, in the case of an assessee being an individual, the capital gain arises from ...
    • How to select New Tax Regime in Income Tax Software?

      Form 10IE To Select New Tax Regime In Budget 2020, taxpayers were given an option to choose between the old and new tax regime. Under the new tax regime, taxpayers have an option to pay lesser tax on the total income.  That means taxpayers will not ...