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Capital Gain Tax rules differ based on asset and holding period. Capital Gain calculator from FY 2017-18 or AY 2018-19 for calculating Long Tem Capital Gain (LTCG) and Short Term Capital Gains(STCG) with CII from 2001-2002. It is a generalized Capital Gain Tax calculator which calculates Long Term and Short Term Capital Gain based on the time of holding ( purchase date and sale date), on the type of assets such as property or Gold or stocks or equity Mutual Funds. Generally, the rules for classifying short and long-term capital gains are as follows. The image below shows the Short and Long Terms for different types of assets and the table explains it in detail.

Cost Inflation Index or CII for the Financial Year 2021-22 is notified as 317. CII was 301 in the last year 2020-21

Long Term & Short Term Capital Gain

Long Term & Short Term Capital Gains

Following posts would be helpful in understanding the concepts.

Capital Gain Calculator from FY 2017-18

Capital Gains Calculator 
Purchase Details
Sale Details
Results
Investment Type:
Time between Sale and Purchase:
Gain Type:
Tax Rate:
Difference Between Sale and Purchase Price
Short Term Capital Gain
CII of Year of Purchase
CII of Year of Sale
Indexed Cost of Purchase
Long Term Capital Gain
Long Term Capital Gain Without indexation
Long Term Capital Gain With indexation
Note:

How to calculate Short Term & Long Term Capital Gains

The following image shows How to calculate Short Term & Long Term Capital Gains

How to calculate Long Term Capital Gains, Short Term Capital Gains

How to calculate Long Term Capital Gains, Short Term Capital Gains

Example of Long Term Capital Gain on Property

I sold some property and know that the transaction will invite capital gains tax liability. My query is, when and how much should I pay as tax? Following are the details of the property:

  • Bought in 2009-10 for Rs 20.50 lakh (including brokerage and stamp duty)
  • Sold in June 2017 for  Rs 42 lakh with Rs 85,000 as brokerage.
    How much would be the tax liability?

If I want to purchase capital gains bonds, when should I do so? How much time do I have to buy them so that I can avoid paying fines and charges, as well as legal and tax-related issues later on?

The gain arising from the transfer of property attracts capital gains tax. Since you have held this property for more than 24 months, the resultant gain is taxable at the rate of 20.60% (plus applicable surcharge) as a long-term capital gain (LTCG).

The tax liability will be calculated as follows:

  • Step 1: Calculating the cost of acquisition (Rs20.5 lakh).
  • Step 2: Calculating the indexed cost of acquisition, which is the cost of acquisition * cost inflation index (CII) in the year of sale / CII in the year of acquisition (Rs20.5 lakh *272/148 = Rs37,67,568).
  • Step 3: Calculating the LTCG [Rs41,15,000 (net of brokerage expenses)– Rs37,67,568 = Rs3,47,432)].
  • Step 4: Calculating the tax on LTCG with cess (Rs3,47,432 * 20.60% = Rs71,571).
  • Step 5: Applying the applicable surcharge depending on your total income for FY2017-18.

Long-Term Capital Tax to be paid is Rs 71,571

The resultant LTCG could be claimed exempt from tax if the gain is re-invested in a specified manner. One such reinvestment that qualifies for the exemption is the purchase of government-notified bonds (to the extent of the LTCG) within 6 months from the sale of the property). You need to buy Capital Bonds worth the Long-term capital Gain ie 3,47,432.

The other alternative available for claiming exemption from long-term gains tax is by reinvesting the sale proceeds in another property within prescribed timelines. If such reinvestment is not made, the LTCG or part thereof would be taxable.

Overview of Capital Gains

Any profit or gain that arises from the sale of a ‘capital asset’ is a capital gain. This gain or profit is charged to tax in the year in which the transfer of the capital asset takes place.

Capital gains are not applicable when an asset is inherited because there is no sale, only a transfer. However, if this asset is sold by the person who inherits it, capital gains tax will be applicable but purchase date would be of original buyer not date of Transfer. The Income Tax Act has specifically exempted assets received as gifts by way of an inheritance or will.

 Type of Asset Short Term Capital Gain Long Term Capital Gain Tax on Short Term CG Tax on Long Term CG
Debt Mutual Fund Before Aug 2014:Selling before 1 year

After Aug 2014: Selling before 3 years

Before Aug 2014:Selling after 1 year

After Aug 2014:Selling after 3 year

Added to income and taxed as per tax slab. Before Aug 2014 If indexation used 20%, Without indexation 10%After Aug 2014 If indexation used 20%
Equity Mutual Funds with STT paid Selling before 1-year Selling after 1 year Taxed at 15%. NIL
Stocks with STT paid Selling before 1-year Selling after 1 year Taxed at 15%. NIL
Fixed Maturity Plan(FMP) Selling before 3 year
Before Aug 2014:Selling after 1 yearAfter Aug 2014:Selling after 3 year
Added to income and taxed as per tax slab. Before Aug 2014 If indexation used 20%, Without indexation 10%After Aug 2014 If indexation used 20%
Real Estate, From FY 2017-18 selling before 2 years

Before FY 2017-18 Selling before 3 years

From FY 2017-18 selling after 2 years

Before FY 2017-18 Selling after 3 years

Part of total income and normal tax rates are applicable. Indexation benefit is available and tax rate is 20%
Gold & Others Selling before 3 years Selling after 3 years Part of total income and normal tax rates are applicable. Indexation benefit is available and tax rate is 20%

How can you save the Long-term Capital Gain Tax on Property under section 54

You can save long-term capital gain tax on the sale of property by claiming Exemption under Section 54. Requirements for saving the tax are as follows

  • To claim the full exemption only the capital gains have to be invested.
  • In case entire capital gains are not invested – the amount not invested is charged to tax as long-term capital gains.
  • A new residential house property must be purchased or constructed to claim the exemption.
  • The property must only be bought in the name of the seller of property and not on anybody else’s name.
  • Only ONE house property can be purchased or constructed.
  • Starting FY 2014-15 it is mandatory that this new residential property must be situated in India. The exemption will not be available for properties bought or constructed outside India.
  • The new residential property must be purchased
    • either 1 year before the sale or
    • 2 years after the sale of the property/asset.
    • Or the new residential house property must be constructed within 3 years of sale of the property
  • If you do not want to buy another property then you can save capital gain tax by investing in  Capital Gains Account Scheme, 1988 before the date of tax filing or 1 year from the date of sale, whichever is earlier.

How to save the LTCG on Asset other than property by buying property?

You can save long-term capital gain tax on sale of any asset other than a House Property by claiming Exemption under Section 54F. Requirements for saving the tax are as follows

  • To claim the full exemption the entire sale receipts have to be invested.
  • In case entire sale receipts are not invested, the exemption is allowed proportionately.  [Exemption = Cost the new house x Capital Gains/Sale Receipts]
  • The property must only be bought in the name of the seller of asset and not on anybody else’s name.
  • A new residential house property must be purchased or constructed to claim the exemption.
  • Only ONE house property can be purchased or constructed.
  • Starting FY 2014-15 it is mandatory that this new residential property must be situated in India. The exemption will not be available for properties bought or constructed outside India.
  • The new residential property must be purchased
    • either 1 year before the sale or
    • 2 years after the sale of the property/asset.
    • Or the new residential house property must be constructed within 3 years of sale of the property
  • If you do not want to buy another property then you can save capital gain tax by investing in  Capital Gains Account Scheme, 1988 before the date of tax filing or 1 year from the date of sale, whichever is earlier.

Cost Inflation Index to be used from FY 2017-18

The CBDT has notified the Cost Inflation Index Applicable from FY/ PY 2017-18 (AY 2018-19) onwards, with Base Year shifted to 2001-02.

SI. No. Financial Year(FY) Assessment Year(AY) Cost Inflation Index
1 2001-02 2002-03 100
2 2002-03 2003-04 105
3 2003-04 2004-05 109
4 2004-05 2005-06 113
5 2005-06 2006-07 117
6 2006-07 2007-08 122
7 2007-08 2008-09 129
8 2008-09 2009-10 137
9 2009-10 2010-11 148
10 2010-11 2011-12 167
11 2011-12 2012-13 184
12 2012-13 2013-14 200
13 2013-14 2014-15 220
14 2014-15 2015-16 240
15 2015-16 2016-17 254
16 2016-17 2017-18 264
17 2017-18 2018-19 272
18 2018-19 2019-2020 280
19 2019-20 2020-2021 289
20 2020-21 2021-2022 301
21 2021-22 2022-2023 317

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