When it comes to money, you want to keep it safe. You may invest but safety comes first. You want to minimise risks to your wealth at every stage. There are times when you tend to give more importance to safety than wealth creation. The fear of losing your hard-earned money makes you do that.
Thank you for registration.
We will keep you updated with our investor educative information.
We already have your details.
Some basic facts on LTCG tax
Published On , 6 Feb 2018 By TOI
SOME BASIC FACTS ON LTCG TAX
On February 1, Finance Minister Arun Jaitley proposed to put a 10% tax on long term capital gains that accrue to an investor from investments in those assets which pay securities transaction tax (STT). In October 2004, LTCG tax was abolished to promote long term investments in shares and Equity mutual funds.
WHAT IS LTCG?
According to the government, LTCG mean gains arising from the transfer of longterm capital asset. The new tax rule will apply to Equity shares in a company listed on a recognised stock exchange, units of an Equity oriented fund and unit of a business trust. The new tax rules will also apply to those assets if the assets are held for a minimum period of twelve months from the date of acquisition, STT is paid at the time of transfer or even at the time of acquisition.
LTCG AND STT
After LTCG tax was done away with in 2004, to compensate the loss of revenue to the exchequer, STT was introduced. Under the current LTCG tax structure, STT and LTCG Tax will co-exist.
INDEXATION ON LTCG
In the previous format, LTCG was allowed to be taxed at 20% after indexation. Indexation is a process of calculation that eliminates the impact of inflation on a gain, price etc. using governmentpublished data. In the new LTCG tax format, the government on Sunday clarified “the benefit of inflation indexation of the cost of acquisition would not be available for computing long-term capital gains under the new tax regime.”
THE LOGIC BEHIND LTCG TAX NOW
The government says that after the abolition of LTCG tax in 2004, the new taxation regime turned “biased against manufacturing and has encouraged diversion of investment to financial assets.” In addition, zero LTCG tax regime also led to “significant erosion in the tax base resulting in revenue loss. The problem has been further compounded by abusive use of tax arbitrage opportunities created by these exemptions.“ So the new 10% tax on LTCG is being introduced “to minimise economic distortions and curb erosion of tax base,” the government said.
utiswatantra.com is a UTI Mutual Fund investor education initiative
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
All the data/information shared above has been collected and compiled by UTI Swatantra's media partners - BCCL (Times of India, ET Wealth), One India (ABP, HBL, Hindustan, HT, Mint, Sakal, The Hindu, The Telegraph), ET NOW & Radio One . UTI Mutual Fund (acting through UTI Trustee Company Pvt Limited) / UTI Asset Management Company) owes no responsibility/liability whatsoever in this regards. The information contained should not be construed as forecast or promise.
Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.