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Is LTCG applicable on ELSS?

Is the 10% LTCG tax (Long Term Capital Gains) tax applicable to a tax saving ELSS fund? How will the tax be calculated?

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2 Approved Answers

Tanya

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 31st March, 2018, then long term gains on such shares will be exempt from tax.

Mridul Agrawal

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

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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