Schedule 112A - No LTCL (loss) benefit for shares / MF units purchased before 31 Jan 2018?

Originally posted by : Amish
	I had purchased 1034.3 equity mutual fund units @ 48.342Rs/unit for total Rs 50000 before 31st January 2018 The value of these unit was 63.33 Rs/unit i.e. total Rs 65502.22 on 31st January 2018 (grandfathering) Then I sold the units in March 2020 for 58.02Rs/unit i.e. total 60010.1 Rs So I was expecting that effective cost of acquisition will be Rs.65502.22 due to grandfathering and effectively it will treated as Long term Capital loss of about 5492Rs But when I fill schedule 112A I find that it takes cost of sale value pf Rs60010 as cost of acquisition too. i.e. cost of sale = cost of purchase!!! So effectively my loss is ZERO. So I do not get any benefit of grandfathering. How is it logical? Can anyone clarify? PS: On the other hand, if there is Long term capital Gain --- it counts it as taxable gain. So loss is not set off but gain is counted!! Strange rule.

Cost should be calculated as per below concept

(1)

Higher of (a) and (b)

(a) Purchase Price   =50,000/-

(b) FMV as on 31-01-2018 =65,502.22/-

Lower of (1) and (2)

(1) As Calculated above = 65,502.22/-

( 2) Sale Price                =60,010.10

Therefore Cost of Acquisition is Rs. 60,010.10/-

Sale Price      Rs. 60,010.10/-

So That No Capital Gain/Loss in your case.

Thanks With Regards

Ravi SADhiyan

Exactly. I know how calculations (rule) work

But rule clearly ignores "the loss" after grandfathering of shares.

Its one way rule..

If I make profit then I have to pay tax on it. (even after grandfathering)
If I am make losses - I cant even set it off. Loss is all mine. No tax deduction.

Had I sold the units on 1st Feb 2018 and bought back at almost same NAV on 2nd Feb 2018 then the same table would have given me benefit of capital loss.

But at that time this kind of rule was not declared so I had not sold the units.

Overall, personally I do not see logic in this rule and it seems partial / one-way / unfair.

Originally posted by : Amish
	Exactly. I know how calculations (rule) work But rule clearly ignores "the loss" after grandfathering of shares. Its one way rule.. If I make profit then I have to pay tax on it. (even after grandfathering) If I am make losses - I cant even set it off. Loss is all mine. No tax deduction. Had I sold the units on 1st Feb 2018 and bought back at almost same NAV on 2nd Feb 2018 then the same table would have given me benefit of capital loss. But at that time this kind of rule was not declared so I had not sold the units. Overall, personally I do not see logic in this rule and it seems partial / one-way / unfair.

Its Not Unfair 

You have incurred only Notional Loss which is not allowed 

If you have incurred actual sale than allowed 

Its means if you sale less than purchase price than Actual Loss is allowed 

FD interest  is taxable at applicable  slab rate.Many companies do not repay  fixed deposits amount.Where do we account for this loss? "Head I win tail you loose "is the policy of inc tax dept.