The long term capital gain tax in India is a tax levied on the sale of certain assets held for more than three years. The tax rate is 10% for most assets, but it can be as high as 20% for some assets. While the long term capital gain tax may seem like a burden, it can actually be used to your advantage. By understanding how the tax works and how it applies to your specific situation, you can use it to save money on your taxes. In this blog post, we will explain the long term capital gain tax in India and how you can use it to your advantage.
What is Long Term Capital Gain Tax in India?
Long-term capital gain tax is a tax levied on the profits from the sale of certain assets held for more than a year. The rate of tax on long-term capital gains is 20% for individuals and companies.
To calculate long-term capital gains, you will need to subtract the original purchase price (adjusted for inflation) from the current selling price. If the resulting number is positive, then you have a long-term capital gain that is subject to taxation.
There are several exemptions to long-term capital gain tax, including gains on the sale of certain types of property and investments held in specific types of accounts. For example, gains from the sale of a primary residence are typically exempt from taxation.
Long-term capital gain tax can be a complex topic, so it’s important to consult with a tax professional if you have questions about your specific situation.
Who is Eligible for Long Term Capital Gain Tax in India?
Long term capital gain tax is levied on the sale of assets held for more than three years. The tax rate is 20% for most assets, although some exceptions apply.
To be eligible for the long term capital gain tax, the asset must have been held for more than three years. In addition, the sale must take place on or after April 1, 2018. Some assets, such as shares of mutual funds and equity-linked saving schemes, are exempt from the long term capital gain tax.
What are the Benefits of Long Term Capital Gain Tax in India?
There are many benefits of long term capital gain tax in India. Firstly, long term capital gains are taxed at a lower rate than short term capital gains. Secondly, they are exempt from wealth tax. Thirdly, they can be used to offset any losses from other investments in the same financial year. Finally, they provide an incentive for people to invest for the long term.
How to Calculate Long Term Capital Gain Tax in India?
To calculate long-term capital gain tax in India, you will need to take the following steps:
1. Determine your tax bracket. Your tax bracket will be determined by your income and filing status.
2. Find the long-term capital gains tax rate for your tax bracket. The long-term capital gains tax rate is a tiered system, with different rates applying to different levels of income.
3. Calculate your long-term capital gain. This is the difference between the sale price of your asset and its original purchase price.
4. Apply the long-term capital gains tax rate to your long-term capital gain. This will give you your total liability for long-term capital gains tax in India.
What are the Rates of Long Term Capital Gain Tax in India?
Long-term capital gains tax in India is levied on the sale of shares or equity-oriented mutual funds that are held for more than 12 months. The long-term capital gains tax rate is 10% without indexation or 20% with indexation, depending on whether you want to include the effect of inflation. Indexation can help reduce your tax liability by increasing the cost base of your investment.
Also Read: Section 192 of Income Tax Act