Before 1st April 2018 Long term Capital Gains on Equity investment were exempt from tax under section 10(38). However this would be the first year (F.Y 2018-19) where the Long term Capital gain would be taxed and taxpayers will have to report the Long term Capital Gains (LTCG) from equity investments.
After the introduction of new section 112A the LTCG from Equity Investment would attract tax @ 10 % for an amount exceeding one Lakh Rupees.
What is the effect of Section 112A before and after its introduction?
Before introduction of Section 112A
Before Assessment Year 2018-2019, long-term capital gain tax on transfer of equity share, units of equity oriented funds and units of business trust was exempted as per provisions of section 10 (38).
After introduction of Section 112A
With effect from 1st April, 2018, provisions of section 10 (38) will not be applicable to any income arising from transfer of equity share, units of equity oriented funds and units of business trust.
From 1st April, 2018, provisions of section 112A shall be applicable to tax income arising from transfer of equity share, units of equity oriented funds and units of business trust.
Reporting of Long term Capital gain on Equity Investments
The reporting of the Gains under this head will be in Schedule CG. On 14 June 2019, the Central Board of Direct Taxes (CBDT) relaxed the rules on how to disclose long-term capitals gains (LTCG) from equity-oriented investments while filing income-tax returns (ITR) for assessment year 2019-20 (AY20). Until now, you were required to disclose LTCG on each equity investment separately in the ITR returns, CBDT has now clarified that you only need to disclose the net consolidated amount of LTCG from different equity-oriented investments in the ITR. This change will simplify the tax-filing process if you have earned LTCG amounting to more than ₹1 lakh from equity investments in financial year 2018-19 (FY19).
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