{"id":4696,"date":"2018-05-28T21:28:06","date_gmt":"2018-05-28T15:58:06","guid":{"rendered":"https:\/\/www.antworksmoney.com\/blog\/?page_id=4696"},"modified":"2019-10-09T17:48:01","modified_gmt":"2019-10-09T12:18:01","slug":"how-to-calculate-capital-gains-tax-on-shares","status":"publish","type":"post","link":"https:\/\/www.antworksmoney.com\/blog\/how-to-calculate-capital-gains-tax-on-shares\/","title":{"rendered":"How to Calculate Capital Gains Tax on Shares"},"content":{"rendered":"

There are two types of capital gains \u2013 short-term and long-term.<\/p>\n

Short-Term Capital Gains:<\/strong><\/p>\n

As per the Income Tax laws of India, if an investor holds an immovable asset for less than 36 months before selling it, it would be considered a short-term capital gain. But this is not applicable to stocks and bonds. Stocks, shares, and bonds are faster-moving compared to real estate. Because of this, if they are held for 12 months or less before the sale, they fall under short-term capital gains. However, this rule is applicable only to securities which are listed and traded on the stock exchange. If you are trading in unlisted or over-the-counter securities, then the 36-month rule applies.<\/p>\n

Long-Term Capital Gains:<\/strong><\/p>\n

Income Tax\u00a0laws in India specify that immovable property held for more than 36 months \u2013 or 3 years \u2013 before sale, fall under long-term capital gains. For stocks, shares, and bonds, this period is more than 12 months instead of 36 months. Unlisted securities, on the other hand, will be considered as long-term capital gains only if sold after 36 months.<\/p>\n

How to calculate Capital Gains on Shares?<\/h2>\n

Short-term capital gains<\/a><\/strong>\u00a0can be computed by subtracting the following 3 items from the total value of sale:<\/p>\n

    \n
  1. Brokerage or expenditure incurred in connection with the sale of the asset<\/li>\n
  2. The purchase price of the asset<\/li>\n<\/ol>\n

     <\/p>\n

    Calculating the\u00a0long-term capital gains<\/strong>\u00a0is a little more complicated. The 3 items you need to subtract from the total sales value are:<\/p>\n

      \n
    1. Brokerage or expenditure incurred in connection with the sale of the asset<\/li>\n
    2. The indexed purchase price of the asset<\/li>\n<\/ol>\n

      Indexed cost<\/strong>\u00a0is arrived at when the price is adjusted against the rise in inflation in the asset\u2019s value. The Government of India releases\u00a0Cost Inflation Index, through which the indexed cost can be estimated. The Cost Inflation Index (CII) from the fiscal year 1981-82 to 2016-17 are available. Here\u2019s the Cost Inflation Index (CII) from 2010-11 to 2016-17:<\/p>\n

       <\/p>\n\n\n\n\n\n\n\n\n\n\n
      Financial year<\/th>\nCII<\/th>\n<\/tr>\n
      2010-11<\/th>\n711<\/td>\n<\/tr>\n
      2011-12<\/th>\n785<\/td>\n<\/tr>\n
      2012-13<\/th>\n852<\/td>\n<\/tr>\n
      2013-14<\/th>\n939<\/td>\n<\/tr>\n
      2014-15<\/th>\n1024<\/td>\n<\/tr>\n
      2015-16<\/th>\n1081<\/td>\n<\/tr>\n
      2016-17<\/th>\n1125<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      The formula to check the indexed purchase price of the asset is:\u00a0Cost of purchase<\/strong>\u00a0multiplied by<\/em>\u00a0CII of the year of sale<\/strong>\u00a0divided by\u00a0<\/em>CII of the year of purchase<\/strong><\/p>\n

      How to calculate Short-Term Capital Gains Tax?<\/h2>\n

      Tax rates differ for short-term capital gains and long-term capital gains. There is a 15% tax on\u00a0short-term capital gains<\/strong>\u00a0that fall under Section 111A of the Income Tax Act. This includes equity shares, equity-oriented mutual-funds, and units of a business trust, sold on or after October 1, 2004, on a recognized stock exchange, and falling under the\u00a0securities transaction tax\u00a0(STT).<\/p>\n

      Capital gain:<\/strong>\u00a0Full sales value \u2013 (Brokerage at 0.5% + purchase price)<\/p>\n

      Short-term capital gains tax:<\/strong>\u00a0Short-term capital gain multiplied by Tax rate divided by 100<\/p>\n

      Debt-oriented mutual funds and preference shares, however, do not fall under the purview of Section 111A. In this case, the income from the sale of the funds or shares will be added to the regular income of the owner and taxed according to normal individual I-T rules.<\/p>\n","protected":false},"excerpt":{"rendered":"

      There are two types of capital gains \u2013 short-term and long-term. Short-Term Capital Gains: As per the Income Tax laws of India, if an investor holds an immovable asset for less than 36 months before selling it, it would be considered a short-term capital gain. But this is not applicable to stocks and bonds. Stocks, … Continue reading “How to Calculate Capital Gains Tax on Shares”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":5537,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-4696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"yoast_head":"\r\nHow to Calculate Capital Gains Tax on Shares - Antworks Money<\/title>\r\n<meta name=\"description\" content=\"There are two types of capital gains \u2013 short-term and long-term. 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