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for long-term capital gains arising from transfer of listed securities as referred to in Section 10(38) has been withdrawn by the Finance Act, 2018 w.e.f. Assessment Year 2019-20 and a new section 112A is introduced in the Income-tax Act.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 (
)) = 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
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