- Income Tax Provisions on Sale of Listed Equity Shares:
- Short-Term Capital Gains (STCG):
- Applicable if shares are held for 12 months or less.
- Tax Rate: 20% (under Section 111A) + surcharge + cess.
- Condition: Sale must take place on a recognized stock exchange and attract Securities Transaction Tax (STT).
- Long-Term Capital Gains (LTCG):
- Applicable if shares are held for more than 12 months.
- Tax Rate: 12.5% (under Section 112A) on gains exceeding ₹1,25,000 in a financial year, without indexation benefit.
- Condition: Sale must take place on a recognized stock exchange and STT must be paid.
- Short-Term Capital Gains (STCG):
- Exemptions Available Under the Capital Gains Head:
- Under Section 54F:
- Applicable if the entire net sale consideration (not just capital gain) is reinvested in a residential house property within the specified time limits:
- Purchase: Within 1 year before or 2 years after the sale.
- Construction: Completed within 3 years of the sale.
- Conditions:
- The taxpayer should not own more than one residential house (other than the new house) on the date of transfer.
- Exemption is proportionate if only part of the sale consideration is invested.
- Applicable if the entire net sale consideration (not just capital gain) is reinvested in a residential house property within the specified time limits:
- Under Section 54F:
- Set-Off of Capital Gains:
- STCG can be set off against any capital loss (short-term or long-term).
- LTCG can be set off only against long-term capital loss.
- Special Cases and Notes:
- Non-Resident Taxation:
- For non-residents, tax on LTCG and STCG is the same, but exemptions under Sections 54F and 112A may not apply unless specified in Double Taxation Avoidance Agreements (DTAAs).
- Non-Resident Taxation:
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