Taxability of ES, deb, L&B etc

20 Oct 2022

Taxability of Equity Shares, debentures and L&B

Income / Loss from sale of equity Shares, Debentures, Bonds and L&B is taxable under the head Income from Capital Gains.

Capital Gain is divided into two parts.

1.  Long Term capital gain.

2.  Short Term capital gain.

 

Capital Gain on sale of Debentures and Bonds

Long term capital gain /short term capital gain in case of debentures and bonds is decided on the basis of the period of holding.

Q.1) what is the period of holding in case of listed debentures and bonds?

Ans.

 If the period of holding in case of listed debentures and bonds is less than 12 months then it is considered as a short term capital gain. If the period of holding in case of listed debentures and bonds is more than 12 months then it is considered as long term capital gain.

Q.2) what is the period of holding in case of unlisted debentures and bonds?

Ans.

In case of unlisted debentures and bonds: - if the period of holding is less than 36 months then it is considered as short term capital gain and if the period of holding is more than 36 months then it is considered as a long term capital gain.

 


Q. 3 ) What is the tax rate on sale of Debentures and Bonds ?

Ans.

1.     Listed Debentures and Bonds. :-

·        Short term capital Gain is calculated on the basis of slab rate.

·         In case of listed debentures and bonds long term capital gain is calculated at the rate of 10% without Indexation under Section 112.

 

 

2.      Unlisted Debentures and Bonds. :-

·        Short term capital gain is calculated on the basis of slab rate.

·        In case of unlisted debentures and bonds long term capital gain is calculated at the rate of 20% without indexation under section 112.

 

 

 

Capital Gain/loss from sale of equity shares

Long term capital gain /short term capital gain in case of equity shares is decided on the basis of period of holding. If the period of holding is less than 12 months then it is considered short term capital gain and if the period of holding is more than 12 months then it is considered as long term capital gain.

 

Short term capital gain of equity share:-  Short term capital gain is calculated sale value of equity shares minus purchase price. Short term capital gain is taxable at the rate of 15% irrespective of tax slab.

 

long term capital gain of equity share:- Before the introduction of budget 2018, income from sale of long term equity shares, equity oriented mutual fund was exempt from tax also loss from equity share until budget 2018 was neither be adjusted nor carried forward because capital gain were also exempt.

 

After the introduction   2018, the long term capital gain on sale of equity shares, equity oriented mutual fund is taxable but long term gain on sale of equity shares up to Rs. 1 lac is exempted from tax. Long term capital gain more than 1 lac is taxable at the rate of 10% irrespective of tax slab.

 

 

 

Capital gain tax on the sale of property

Capital gain/loss from sale of Land and building (immovable property) is taxable under the head income from capital gain.

 

Long term capital gain on immovable property:- 

If the taxpayers sell immovable property after 24 months from purchase of property  then gain or loss from such property is long term capital gain.

As per section 112 of the Income Tax Act long term capital gain is taxable at the rate of 20% with indexation cost. Indexation cost is calculated from cost inflation index. Taxpayers also take the benefit of improvement cost on land and building.

 


Q. 4) How to calculate long term capital gain on immovable property ?

Ans.


Short term capital gain on immovable property:-

 If taxpayers sell immovable property within 24 months of then it is considered short term capital gain. The short term capital gain on immovable property is calculated on slab rates. There is no Indexation benefit on short term capital gain also there is no exemption under sec. 54 to 54GB. Short term capital gain on immovable property is only calculated on the basis of cost of acquisition, cost of improvement, and transfer expenses.



 Q.5) How to calculate short term capital gain on immovable property?

Ans.


Suhani