Suppose for the last AY, my total income from all sources is Rs 2.4 Lakh.
This 2.4 lakh is entirely from long term capital gains - sale of units of mutual fund investment made many years back.
I know that for Long term capital gain over 1 Lakh, a tax of 10% is applicable. But what if my total income itself is under 2.5 Lakh?
On the IT website, I found a tutorial which states otherwise - that LTCG is adjustable against the basic exemption limit.
Page 12-13 of this document here https://www.incometaxindia.gov.in/tutorials/15-%20ltcg.pdf
Someone experienced please clarify.
If your total income is below 2.50 lakhs which includes only LTCG as u/s. 112A, there will not be any tax liability.
Ok, thank you. And next year onwards, this 2.5L will become 5L. Right?
Basic exemption limit remains 2.50 L only. It will not become 5 lakhs.
Though rebate u/s. 87a is allowed for income upto Rs. 5 lakhs. So, need to understand its effect correctly.
Understood. Thanks for the references, I will read through those.
Ok, so if I have LTCG (only and no other income) above 2.5L but below 5L, the first 2.5L is exempt, and then 10% capital gains tax is calculated on the amount over 2.5L and then the rebate of 12.5K is applied on that. Is it understanding correct?
In simple words, this process is taken care by departmental utility itself.
You just fill the data of the LT transactions in Schedule 112A; in ITR 2, and check the tax liability as per RULES of IT act.
If the LTCG is above 4.75 lakhs, there will be tax liability!!!
Many thanks for the guidance.
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