Long Term Capital Gains Tax on Shares: This is how to manage your stock market income

For listed shares and equity oriented mutual funds, holdings for more than 12 months fall under the ambit of LTCG where income up to Rs 1 lakh is tax exempted.

Long Term Capital Gains Tax on Shares: This is how to manage your stock market income
For other than listed equities and mutual funds, LTCG is applicable on holdings above 24 months. Photo: Pixabay
By Asit Manohar
Updated: Wed, Feb 13, 2019
10:57 am
New Delhi, ZeeBiz WebDesk
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LTCG tax on shares: In India, a lot of people invest in shares and security oriented mutual funds as it is expected to give a good return in a small time with minimal risk. But, while investing they must know about the Long Term Capital Gain (LTCG) tax that gets levied on the investment with some terms and conditions and some relaxation as well. Otherwise, the entire exercise would fail and the investor may land in trouble due to being unknown to tax and investment rules. Balwant Jain, a Mumbai-based tax and investment expert explained that LTCG is applicable on both listed equities and equity-oriented mutual funds and other than listed shares but the time frame for applying LTCG differs.

Speaking on the taxes levied on equities SEBI registered investment expert Jitendra Solanki told Zee Business Online, "Equity holding for less than 12 months, the short-term capital gain tax is levied, which is 15 per cent on the net income. For holdings of listed securities more than 12 months holdings fall under the ambit of LTCG."

See Zee Business video below:

Elaborating upon the LTCG and various slabs Balwant Jain added, "For listed shares and equity oriented mutual funds, LTCG is applicable on shareholding for more than 12 months. In this case, the tax levied is 10 per cent without indexation with tax exemption up to Rs 1 lakh income." He said that  Old shares holding's prices would be determined from the prices as on 31st January 2018. Balwant Jain went on to add that if the shares other than listed shares are held for 24 or more months, the LTCG is levied with 10 per cent tax without indexation and 20 per cent with indexation. Hence, the investor must calculate his or her tax in both cases so that he or she can maximise its return.

For other than listed shares and mutual funds other than equity oriented scheme (bonds and debentures), the LTCG is levied on holding for more than 36 months. In these holdings, the LTCG is 20 per cent with indexation. Jain said that in such holdings investors can't have the luxury of choosing indexation benefits.