How is long-term capital gain (LTCG) and short-term capital loss (STCL) on sale of shares taxed during the same financial year? - Vinod Sharma, Jaipur
The taxability of LTCG resulting from sale of shares (held for more than 12 months from acquisition date) would depend on whether at the time of sale, the securities transaction tax (STT) is payable or not. If you are liable to pay STT at the time of sale of shares on a recognised stock exchange, then the LTCG shall be exempt from tax. The said exempted LTCG should be disclosed in your personal income tax return to be compliant from a reporting perspective.
However, if you are not liable to pay STT, then the LTCG would be taxed at 20 per cent. Further, an education cess of 3 per cent on basic salary as well as surcharge (if any) is applicable. Additionally, if total taxable income during the financial year (FY) 2015-16 exceeds `1 crore, surcharge at 10 per cent on basic rate should be applied. The LTCG could be claimed as exempt from tax by investing in either a residential apartment or specified bonds, subject to the fulfilment of conditions specified under the domestic tax law.
Further, STCL resulting from sale of shares held for less than 12 months can be set off against the taxable shortterm capital gain (STCG) or LTCG, if any, resulting from sale of any capital asset in the same FY. If the STCL cannot be set-off in the same FY, then the balance can be carried forward to subsequent eight FYs. In each of these, the said STCL can be set-off either against taxable STCG or LTCG.
