Section 112A is applicable with effect from assessment year 2019-20 only if the following conditions are satisfied.
- The total income includes any income chargeable under the head “Capital Gains”.
- The capital gains arise from the transfer of a long term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust.
- (a) In case of equity shares – Securities transaction tax (STT) has been paid on acquisition and transfer of equity shares. However, department has clarified that the requirement of STT payment at the time of acquisition is applicable only when shares are acquired after October 1,2004.
(b) In case of units of equity oriented fund or unit of business trust – STT has been paid on transfer of such capital asset.
Long term capital gain in excess of Rs. 1 lacs taxable @ 10%
If long term capital gain does not exceeds Rs. 1 lacs, it is not chargeable to tax. If such gain exceeds Rs. 1 lacs, the amount in excess of Rs. 1 lacs will be taxable at the rate of 10% (+surcharge+4% HEC). The rate of 10% is applicable whether assessee is a corporate assessee or non-corporate assessee.
Benefit of exemption limit
This benefit is available only in case of an individual or HUF being a resident, where the total income as reduced by such long term capital gains is below the maximum amount which is not chargeable to income tax, then, the long term capital gains as mentioned above at point no.1, shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income tax.
No deduction under chapter VI-A (Section 80C to 80U) shall be allowed from capital gain mentioned at point no.1 above
No rebate u/s 87A shall be allowed from capital gain mentioned at point no.1 above
Mode of computation of Cost of Acquisition
If equity shares/units acquired by the assessee before February 01, 2018, cost of acquisition shall be calculated as follows:
Step 1 : Find out actual cost of acquisition of equity shares/units
Step 2: Find out
- Fair Market value of such asset on January 31, 2018;
- full value of consideration received/occurring as a result of transfer of equity shares/units (whichever is less)
Cost of acquisition shall be deemed to be amount computed in Step 1 or Step 2, whichever is higher
Fair market value on January 31, 2018 shall be calculated as follows:
- Quoted shares/units : In a case where equity share/unit is listed on any recognised stock exchange, the highest price of share/unit quoted on such exchange on January 31,2018 is taken as fair market value. Where, however, there is no trading in such share/unit on such exchange on January 31,2018, the highest price of such share/unit on such exchange on a date immediately preceding January 31,2018 when such share/unit traded on such exchange shall be the fair market value.
- Unlisted units : In a case where a unit is not listed on a recognised stock exchange, the net asset value (NAV) of such unit as on January 31,2018 is taken as FMV.
- Indexation benefit is not available when tax is payable u/s 112A
- Mode of computation of capital gain in foreign currency in the case of a non-resident is not applicable when tax is payable u/s 112A
Also Read: Income Tax on F&O and Intraday Trading
Also Read: TDS on Purchase of Immovable Property (Section 194-IA)
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