Is Tax Audit Required if there arises a capital gain by selling equity shares?

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Practice
6 Points Posted on 07 January 2023

Is Tax Audit Required if there arises a capital gain of 4 crores by selling equity shares? The person was holding the shares in the past few years and now selling them realising capital gains of 4 crores approximately.

Is he required to go through any audit or just pay a flat 10% Long Term Capital Gain Tax? If so, can he directly pay that via the advance tax payment?

The person doesn't own any other income sources and doesn't run any company or business. He is a pure investor and doesn't trade intraday or derivatives.

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On 07 January 2023 at 10:59 Report
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Quick Summary
If you've realised a significant capital gain of approximately £4 crore from selling equity shares held for several years, you might wonder about a tax audit. Generally, a tax audit under Section 44AB of the Income Tax Act is applicable to income taxable under the head 'business and profession'. As capital gains from investments are not typically considered 'turnover' for audit purposes, a tax audit is usually not required in such cases. You can likely pay the flat 10% Long Term Capital Gains Tax directly via advance tax payment.

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Profession
28261 Points Posted on 09 January 2023
NO NOT REQUIRED
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On 09 January 2023 at 16:42
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CA IN PRACTICE
150 Points Posted on 15 January 2023
The provisions of audit are applicable to if the income is taxable under head business and profession. Since in your case there is not business/profession income. Audit is not applicable.
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On 15 January 2023 at 20:29
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Ca in Practice
34 Points Posted on 18 January 2023
In my opinion, the capital gain on sale of investment is not covered in the definition of turnover for the purpose of section 44AB of the income tax act and hence such income to be excluded while calculating tax audit limit under section 44 AB
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On 18 January 2023 at 09:44

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