Long Term Capital Gains (LTCG) refers to any profit or gain arising from the sale of a long-term capital asset. Persons having income under the head “capital gains” are required to file the return form ITR-2 electronically.
As per the recent clarification issued by the Central Board of Direct Taxes, a taxpayer now need to disclose only the net consolidated amount of LTCG from different equity-oriented investmentsin the new ITR form. The amendment was made in order to simplify the tax process and to make the calculation easier for the taxpayers. However, the amendment is applicable only to such taxpayers, whose LTCG from equity investments exceeds INR 1 Lakh in the financial year 2018-19.
Till this clarification was issued, taxpayers were required to disclose and report each transaction separately. But the consolidated figure must be reported very carefully without any error.
Long Term Capital Gains on equity:
As per the latest amendments introduced in the Finance Bill, LTCG made from the sale of listed shares and equity-oriented mutual funds shall be taxable at the rate of 10% provided that:
- Such instruments are held for a period of more than 1 year,
- LTCG from the sale of above instruments exceeds INR 1 Lakh,
- Securities transaction tax (STT) is paid at the time of purchase and sale of the shares/mutual funds.
- Surcharge and cess amount must be paid in addition to the above rate of tax mentioned.
- If investment in equity mutual funds/shares was made before 31st July 2018, the grandfathering provision will apply and any gains till that date will be exempt from tax.
- Short Term Capital Gains from equity investments will continue to be taxed at the rate of 15% excluding cess and surcharge until any further notification is issued by the Ministry of Finance.
Disclosing LTCG in ITR
Assessees who made LTCG from equity investment in the financial year 2018-19 will be required to disclose the same in the tax returns ITR-2 and ITR-3 to be filed by July 2019.
As per the CBDT clarification, LTCG from the sale of different equity shares/mutual funds/business trusts should be computed separately but in the Income Tax Return, the aggregate amount of such investments should be mentioned.
Also, as per the provisions and rules of the Income Tax Act, Long Term Capital Loss, if any, from the sale of a capital asset, can be set off against the LTCG from any asset in the current financial year. And if the loss cannot be wholly utilized against the gains, then such loss can be carried forward for 8 subsequent years and can be set off against the capital gains of such subsequent years.
Assessees should appropriately disclose the aggregate LTCG/LTCL in the relevant columns and spaces provided in the Income Tax Return forms. Forms for filing Income Tax Return can be downloaded from the official website of the Income Tax Department and after filing, the same can be uploaded on the website.
