Finance minister Arun Jaitley introduced the much talked about long term capital gains tax (LTCG) on sale of listed securities on gains of over Rs1 lakh.
The move surprised D-Street as most analysts were factoring in a change in definition of ‘Long Term’ to 2 or 3 years from 1 year.
Jaitley, introduced a long-term capital gains tax of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. However, all gains till 31st January 2018 will be grandfathered and short term capital gains remains unchanged at 15 percent.
For example, if the equity share is purchased 6 months before 31st January 2018 at Rs100 and the highest price quoted on 31st Jan is Rs120. There will be no tax on the sale, if the stock is sold after 1 year.
However, any gains in excess of Rs20 earned after 31st Jan 2018 will be taxed at 10 percent if this share is sold after 31st July 2018.