Is LTCG applicable on ELSS?

Yes, long term capital gain (LTCG) tax is applicable on Equity Linked Savings Scheme (ELSS). Following are the tax implications associated with ELSS:

A tax of 10% is applicable on gains of more than Rs.1 lakh, held for a period of more than one year.

However, if the investor sells his shares before 31^st March, 2018, then long term gains on such shares will be exempt from tax.

Yes. LTCG shall be applicable to ELSS fund exactly like it is applicable to a equity fund.

Calculation of long-term capital gains on sale of ELSS fund/ equity fund shall be applicable as follows-

• A person who sells shares after April 1, 2018 shall be required to pay a long-term capital gains tax at the rate of 10 percent on gains of more than ₹ 1 lakh. For such shares, the notional cost of acquisition will be price on Jan. 31, 2018.
• If a person who has held shares for more than one year sells them before March 31, 2018, there will be no long-term capital gains tax.
• A person who sells shares after April 1, 2018, at a loss, the cost of acquisition for such shares would be the price on the actual date of acquisition and not the notional cost on Jan. 31, 2018.

For example,

Purchase Price- ₹100

Highest price as on 31/01/2018- ₹125

Selling price- ₹140

Case 1: When shares sold before 31.1.18

LTCG= NIL

Case 2: When shares purchased before 31.1.2018 and sold after 31.3.2018

Total LTCG- ₹40

Exempt LTCG- ₹25

Taxable LTCG- ₹15 @ 10%= 1.5