With the newly announced LTCG tax (Long Term Capital Gain tax), there are many doubts and myths floating around.
Here are 10 facts about LTCG that you must know about.
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10 Facts About LTCG
- LTCG tax – 10% is charged on equity shares listed on a recognized stock exchange and equity mutual funds which are held for more than a year.
- The tax is applicable only on the gains and not on the entire investment amount.
- Tax is charged as per LTCG in the year in which the equity shares and equity oriented mutual funds are sold.
- Indexation benefit has not been provided to the investors.
- The capital gains of an investor till 31st January, 2018 will be grandfathered i.e no Long Term Capital Gain tax will be charged on capital gains till 31st January, 2018.
- There is still no tax on long-term gains for an amount up to Rs 1 lakh.
- LTCG tax will be applicable on gains from ELSS funds also.
- Though market might have responded negatively and reacted with a fall in NIFT and Sensex in the past 2 days but in the long run Government’s push to rural and small industries might bring significant growth in the economy.
- In 2004, the government had abolished LTCG on equities over a year. Since then there was no tax on LTCG of equities, only Securities Transaction Tax (STT) of 0.001% on sale of mutual funds and STT of 0.1% both at the time of buying and selling of equities was charged.
- Even after the introduction of this tax, many Mutual Fund CEOs have said LTCG tax is not so bad after all.