Calculation of Short-Term Capital Gain Tax
Before computing tax on Short-Term Capital Gain, it is mandatory to determine the value of Short-Term Capital Gain.
Calculation of the value of short-term, gain in case of capital assets other than shares:
Particulars |
Amount(₹) |
---|---|
Sales Consideration |
XXXX |
Less: Cost of acquisition (purchase value) |
(XXXX) |
Less: Cost of improvement |
(XXXX) |
Less: Expenses incurred on transfer of asset |
(XXXX) |
Short-Term Capital Gain (STCG) |
XXXX |
Calculation of Short-term gain on shares:
Particulars |
Amount(₹) |
---|---|
Sales Consideration |
XXXX |
Less: Cost of acquisition (purchase value) |
(XXXX) |
Less: Expenses incurred on transfer of asset |
(XXXX) |
Short-Term Capital Gain (STCG) |
XXXX |
A. Calculation of Short-Term Capital Gain Tax Liability under Section 111A
Illustration:
Amit purchased equity shares worth ₹ 20,00,000 on 1st November 2022 at NSE. After 3 months he sold the same equity shares for ₹ 26,00,000 at NSE and paid the STT. The transfer cost incurred is ₹ 1,00,000. Besides, this he also invested ₹ 3,00,000 in PPF. Calculate the STCG and tax liability of Amit.
Solution:
Calculation of Short-term gain:
Particulars |
Amount(₹) |
---|---|
Sale Consideration |
26,00,000 |
Less: Cost of acquisition (purchase value) |
(20,00,000) |
Less: Expenses incurred on transfer of asset |
(1,00,000) |
Short-Term Capital Gain (STCG) |
5,00,000 |
Calculation of STCG tax liability:
Particulars |
Amount(₹) |
---|---|
Short-Term Capital Gain |
5,00,000 |
Less: Deduction under section 80C-80U |
NA |
Total Taxable Income |
5,00,000 |
Tax on Total Income (15% on STCG under section 111A) |
75,000 |
Add: Health and Education Cess (4% on tax) |
3,000 |
Total Tax Liability |
78,000 |
Note: No deduction under section 80C-80U is applicable for the short-term capital gains referred to in Section 111A.
B. Calculation of Short-Term Capital Gain Tax Liability not covered under Section 111A:
Illustration:
Kavita purchased a property in Patna worth ₹ 50,00,000 and sold the same property after 1.5 years for ₹ 80,00,000. She paid the maintenance charges of ₹ 5,00,000 and brokerage of ₹ 10,00,000 for the same. Moreover, she claimed a total deduction of ₹ 2,00,000 under section 80C-80U. Calculate the STCG and tax liability.
Solution:
Calculation of Short-term gain:
Particulars |
Amount(₹) |
---|---|
Sale Consideration |
80,00,000 |
Less: Cost of acquisition (purchase value) |
(50,00,000) |
Less: Cost of improvement |
(5,00,000) |
Less: Expenses incurred on transfer of asset |
(10,00,000) |
Short-Term Capital Gain (STCG) |
15,00,000 |
Calculation of STCG tax liability:
Particulars |
Amount(₹) |
---|---|
Short-Term Capital Gain |
15,00,000 |
Less: Deduction under section 80C-80U |
(2,00,000) |
Total Taxable Income |
13,00,000 |
Tax on Total Income (Slab Rate W.N.2) |
2,02,500 |
Add: Health and Education Cess (4% on tax) |
8,100 |
Total Tax Liability |
2,10,600 |
Notes:
1. Property other than shares are not covered under section 111A, so tax on the gain is charged under the normal slab rate.
2. Calculating tax on the slab under the old tax regime:
Up to 2,50,000 |
NIL |
2,50,000 @ 5% |
12,500 |
5,00,000 @ 20% |
1,00,000 |
3,00,000 @ 30% |
90,000 |
Total Tax |
2,02,500 |
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