Adjustment of capital gain against basic exemption.

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junaid (Querist)

19 July 2016 Dear Sir,
In the case of propreitorship firm, I am having speacial rate income say 20% long term capital gain Rs 50000,So Can I adjust this LTCG Rs 50000 against Basic Exemption limit of Rs 250000

Amol S Joglekar

Amol S Joglekar (Expert)

19 July 2016 Of course yes...you can avail the basic exemption

junaid

junaid (Querist)

21 July 2016 Thank you sir for helping me out. but sir my concern is that I have been heard that the speacial rate income cannot be adjusted against basic exemption limit and the 20% Long term capital gain is a speacial rate income. so sir please can you explain me .

Amol S Joglekar

Amol S Joglekar (Expert)

21 July 2016 If the income is below the basic exemption limit, then there will be no tax liability. Now a question arises that can an individual adjust the basic exemption limit against long-term capital gain? The answer will depend on the residential status of the individual (i.e., resident or non-resident). The provisions in this regard are as follows :
Only a resident individual/HUF can adjust the exemption limit against LTCG. Thus, a non-resident individual and non-resident HUF cannot adjust the exemption limit against LTCG.
A resident individual can adjust the LTCG but such adjustment is possible only after making adjustment of other income. In other words, first income other than LTCG is to be adjusted against the exemption limit and then the remaining limit (if any) can be adjusted against LTCG.

please go through the liink for various illustrations on capital gains

https://www.incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf

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