By Chirag Nangia
From the mutual fund website, I have downloaded my capital gains statement. However, I am confused regarding the LTCG amount which I should declare in my ITR-2. Under Section C, the ‘Long Term without index’ is Rs 16,714.55. But when declaring LTCG, I have to mention ‘Indexed LTCG’, based on the year of investment.
a) Please let me know how I need to calculate this amount. Should the indexed LTCG amount be declared in ITR-2 or Rs 16,714.55?
b) If indexed LTCG has to be declared, why is that mutual fund AMC does not provide it in the statement?
—S R Hiremath
Long term capital gains on sale of listed units of equity oriented mutual funds (held for a period more than 12 months) were exempt up to March 31, 2018. With effect from April 1, 2018, such gains in excess of Rs 1 lakh have been made taxable at the rate of 10%, provided Securities Transaction Tax (STT) has been duly paid. Further, the benefit of grandfather-ing provisions applies to units acquired up to January 31, 2018.
Accordingly, in case of equity mutual funds purchased on or before 31st January 2018, the Cost of Acquisition shall be higher of—(i) the cost of acquisition of such asset; and (ii) lower of—(A) fair market value of such asset; and (B) sale consideration of such asset. Accordingly, capital gains shall have to be computed by deducting cost of acquisition (determined as above) from the sale consideration, which shall be subject to tax at 10% under Section 112A.
Please note that the benefit of indexation shall not be available while computing capital gains as such.
However, if capital gains have been derived from sale of debt mutual funds, then capital gain shall be taxable at the rate of 20% and you shall be permitted to avail the benefit of indexation.
Indexation can be done using the Cost Inflation Index (CII) available on the income tax website. Multiply the cost of acquisition by the CII of the year in which the mutual funds were transferred and then divide the product by the CII for the year in which the mutual funds were purchased.
Please note that debt mutual funds are categorized as long term if held for a period more than 36 months, whereas equity-oriented funds are considered as long term if held for a period more than 12 months.
The writer is director, Nangia Andersen India. Send your queries to firstname.lastname@example.org