What is Long Term Capital Gains Tax for Indian share market transactions with STT.?

Question

What is the EXACT definition of LTCG with respect to Indian stocks traded on the stock exchanges ?

Is it sell after 1 year or 1 year + 1 day or what ? I tried google and believe it or not, not one article came up with a simple explanation for the definition of LTCG with respect to share transaction on a valid stock exchange.


In my case, I have bonus shares issued by Mphasis BFL on 26/11/2005 for shares originally purchased on say 7/1/2004. If I were to SELL my bonus shares on 27/11/2006 (i.e., on Monday/tomorrow), will I be eligible for Long term capital gains tax (which equals ZERO) or should I have to wait until 28/11/2006 or what ?

For tax purposes, what is the date of acquisition for the bonus shares ? Is it the date of bonus shares (which in my case would then be 26/11/2005) or the date of original purchases (in my case, it would have been 7/1/2004)

Answer 1

If the date of allotment of bonus shares is on 26-11-05, you can sell it on 27-11-06 in NSC or BSE and it will become LTCG and it is tax free.

The date of allotment of bonus shares for you is 26-11-05 and not 7-1-04. The date of purchase 7-1-04 applies for the shares purchased on 7-1-04 and bonus shares is not connected with this date for the purpose of LTCG.

http://incometaxindia.gov.in/FileYourReturn/CapitalGains.asp

Answer 2

the Income Tax Act., not define the LTCG but it define the Short term capital Gain
i.e in case of shares: purchases of shares holding period is less than 1 year is treated short term capital asset

that means exceds the 1 year is treated as Long term capital asset.

so exact 1 year or above is treated as Long term capital Asset

is there further clarification contact to service provider
E.Mail Id: [e-mail]

Answer 3

ACCORDING TO THE INCOMETAX ACT CAPITAL GAINS ARE CHARGEABLE TO TAX...
CAPITAL GAINS MAY BE LONG TERM OR SHORT TERM.
LTCG COMPRISES OF ASSETS WHICH ARE HELD FOR MORE THAN 3 YEARS,WHERE AS STCG LESS THAN 3 YEARS
EXCEPTIONS FOR LTCG ARE SHARES DEBENTURES ETC WHICH SHOULD BE HELD FOR MORE THAN 1 YEAR
1 YEAR = 365 DAYS TO BE LONG TERM
ACCORDINGLY YOUR ORIGINAL SHARES ARE TAX FREE AS PER SEC 10(38)
HOWEVER BONUS SHARE SHOULD ALSO BE HELD FOP MORE THAN 1 YEAR ie 365 DAYS SO IT IS BETTER YOU SELL IT ON 28/11/2006... COZ DATE OF ALLOTMENT EXCLUDED
THE COST OF AQUSITION FOR BONUS SHARES IS NIL...
AND DATE OF AQISITION FOR BONUS SHARES IS THE DAY IT (BONUS)WAS ALLOTED TO YOU.....

Answer 4

Long term capital gain tax are not applicable for share.It is applicable for only debt oriented mutual fund scheme.If u sell your share after one year from the date of purchase or bonus allotment date u have to pay only STT(security transaction tax)@0.15%.But if u sell your share within one year from date of purchase or bonus allotment date u have to pay straight short term capital gain tax @10%.

Answer 5

The provision which provided levy of long term capital gains tax on shares has already been abolished.
Now if U sale the shares after one year; no capital gains tax is leviable.
refer to provisions of Income Tax act on the link below:
http://www.allindiantaxes.com/income-tax-income-tax-act.php

Answer 6

Mr. reddy is absoultely right.

Answer 7

Mr. Reddy is right!