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Home / Finance / Taxes / Is Basic Exemption Limit Available for Long Term Capital Gain?
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Is Basic Exemption Limit Available for Long Term Capital Gain?

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0 2023-08-29T10:17:12+00:00

Indian taxpayers mostly ask

is basic exemption limit available for long term capital gain

? So let's clear it up today.

Any capital asset held by the taxpayer for more than 36 months immediately preceding the date of its transfer will be treated as a long-term capital asset. The provisions of long-term capital gains are given in sections 112 and 112A of the Income Tax Act.

Capital gain arising on the transfer of long-term capital assets is termed a long-term capital gain.  The basic exemption limit under the Income Tax Act, of 1961, generally applies to income earned from various sources, including long-term capital gains (LTCG). However, there are specific provisions related to LTCG taxation that you should be aware of:

Long-Term Capital Gains (LTCG) Taxation:

In India, capital gains are categorized as either short-term or long-term based on the holding period of the asset. For most assets, including equity shares and equity-oriented mutual funds, if the holding period is more than 12 months, the gains are considered long-term.

Indexation Benefit:

For assets other than equity-oriented assets, the LTCG is computed after adjusting for inflation using the Cost Inflation Index (CII). This is known as the indexed cost of acquisition, which helps reduce the tax liability.

Basic Exemption Limit:

The long term capital gain basic exemption limit under the Income Tax Act generally applies to the total income of an individual, which includes income from various sources like salary, business, house property, and capital gains. However, the specific provisions for applying the basic exemption limit to LTCG can depend on the nature of the asset, the holding period, and any applicable exemptions or deductions.

The income tax rates for different age groups according to new tax regime for FY 2023-24 (AY 2024-25) is as follows:

The tax rate is the same for all age groups, whether an individual of 60 years, HUFs, senior citizens of 60 years to 80 years or super senior citizens of 80 years. They all are eligible for tax rebate under section 87A if their net taxable income is up to Rs 7 lakhs. None of the person has to pay tax if his income falls below Rs 3 lakhs as per the new tax regime.

Need help with property transfer and documentation? Contact legal experts here Read more: Which banks are authorised to open capital gain account? How to withdraw money from capital gain account? Time Limit for Deposit in Capital Gain Account Scheme
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