Long-term capital loss resulting from the sale of shares can be offset and carried forward

The ministry clarified that the tax would be levied on the transfer of shares from April 1 and that the gains will be calculated by deducting the acquisition cost from the transfer value. To better explain it, he listed four scenarios:

Scenario 1

A share acquired on January 1, 2017 at Rs 100, has a fair market value of Rs 200 as of January 31, 2018 and is sold on April 1, 2018 at Rs 250. The fair market value of Rs 200 will be considered as the acquisition cost, and the long-term capital gain will be Rs 50 (Rs 250 – Rs 200).

Scenario 2

A share acquired on January 1, 2017 at Rs 100, has a fair market value of Rs 200 as of January 31, 2018 and is sold on April 1, 2018 at Rs 150. In this case, the actual acquisition cost is lower than the fair value market value as of January 31, 2018. However, the sale value is also lower than the fair market value as of January 31, 2018. Accordingly, the sale value of Rs 150 will be considered as the acquisition cost and the long term capital gain. term will be NIL (Rs 150 – Rs. 150).

Scenario 3

A share acquired on January 1, 2017 at Rs 100, has a fair market value of Rs 50 as of January 31, 2018 and is sold on April 1, 2018 at Rs 150. In this case, the actual cost of Rs 100 will be taken as the cost of acquisition, and the long-term capital gain will be Rs 50 (Rs 150 – Rs 100).

Scenario 4

A share acquired on January 1, 2017 at Rs 100, has a fair market value of Rs 200 as of January 31, 2018 and is sold on April 1, 2018 at Rs 50. In this case, the sale value is less than the fair market value at January 31, 2018 as well as the actual acquisition cost. Therefore, the actual cost of Rs 100 will be taken as the acquisition cost in this case, and the long term capital loss will be Rs 50 (Rs 50 – Rs 100) in this case.

The fair market value will be the highest price of a share or unit listed on a recognized stock exchange on January 31, 2018, in the case of a listed share, and will be the net asset value of such unit on January 31, 2018. January. 2018 in the case of an unlisted unit.

In the event of free allocation of shares and issue of rights, the fair market for these shares as of January 31, 2018 will be considered as the acquisition cost, and the gains accrued until January 31, 2018 will be exempt.

The umbrella body for direct taxes also specified that the benefit of indexation to inflation for the cost of acquiring shares will not be available for the calculation of long-term capital gains.

While the proposed tax regime is aligned with international trends, removing indexation will significantly reduce the tax trade-off between long-term and short-term gains, Thingna said.


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