Long Term Capital Gain-LTCG (Budget 2018)

Long Term Capital Gain Tax brought a shocking scenario for the Long-term Investor, Up to the previous Budget, there is no such Long-Term Capital Gain-LTCG regime for the investor.

During Budget announcement Finance Minister Shri Arun Jhateli, introduces New Tax regime of Long-Term Capital Gain for 10% exceeding ₹ 1 Lakh.

In Simple Words:

What is Long Term Capital Gain Tax

Long Term Capital Gain Tax is the tax revenue generate by the Government of India against profit generation of the investor from the long-term assets.

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How It Works:

As per the announcement made “the Return on Investment up to 31 January 2018 is not taxable and is said to be ‘grandfathering’ in LTCG”.

This is applicable to both Shares and Mutual Funds.

The Exempted Limit for Long-Term Capital Gain is ₹ 1 Lakh from FY 2018-19

Here are different Scenario is details:


Scenario 1

it is very clear that the shares or related segment sold after 31st March 2018 is not Taxable.

Scenario 1 LTCG

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Scenario 2 (Case A):

According to this segments, it is very clear that the shares bought before 31st January 2018 and Sold after 31st March 2018, the Profit is Taxable by 10%.

Although the Investor will get the benefit of Highest Price of 31st of January 2018 and the Profit amount will be deducted from the difference of Higher price on 31st of January 2018 and Brought Price.

Scenario 2 Case A LTCG

Scenario 2 (Case B):

In some of the cases If the Investor brought the shares and sold after 31st March 2018, it is taxable but if the price of the shares sold is less then the Price on 31st of January 2018, then in this scenario there is no tax levied, it is treated as Loss.

Scenario 2 Case B LTCG

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Scenario 2 (Case C):

It’s a Clearcut case, in this segment, the sales Price of the shares bought is less then Purchase Price, the profit of the investor is Zero, so there is no tax liability levied on the Investor.

Scenario 2 Case C LTCG

Scenario 2 (Case D):

This case is as similar as Scenario 2 (Case C), the only difference is the Price on 31 January 2018 is higher than the price of Sales, in this segment it is also treated as Zero because the Brought Price of the Share is higher than the sales and grandfather price.

Scenario 2 Case D LTCG

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In all these Segments it is very clear to understand the Tax scenario for different cases.

You are wondering what after 1st Feb 2018:

Scenario 3

It will clearly symbolics that if you bought the shares after 31st January 2018, you will not get any benefit of grandfathered concept, you have to pay 10 % on Profit made as Long Term Capital Gain.

Scenario 3 LTCG

This Tax region causes a great loss for the investor or will turn to be the bonus revenue for the government of India. Post your comments.

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