Capital Gains As Per Income Tax Return A.Y. 2018-19 and 2019-20

How to disclose capital gains in your income tax return:-

If you have sold shares, mutual funds units, property or gold, you must disclose the gains in your income tax returns. Here's how to calculate your gains and disclose them.

While filling your income tax return for A.Y. 2018-19, the deadline for which is 31 July,  don't just look at the Form 16 you get from your employer even if your are a salaried individual. Make sure you disclose gains or losses made from selling shares or redeeming mutual funds units, or selling a property or jewellery.

Irrespective of the amount gained or lost, one must disclose capial gains or losses while filling ITR.

Here is how you can calculate capital gains from different assets and how disclose them while filling ITR.

HOW MUCH TAX YOU PAY ON CAPITAL ASSETS ?

For any capital asset yoy hold, you may need to pay tax depending on the  period of holding. Here are the tax rates for various holdings over shrot and long terms for individuals for A.Y. 2018-19
	Short Term Capital Gain Tax Rate	Long Term Capital Gain Tax Rate	Terms
Stocks	15%	Exempt*	More Than 1 Year
Bonds	Slab Rate	10%	More Than 1 Years
Gold	Slab Rate	20%**	More Than 3 Years
Real Estate	Slab Rate	20%**	More Than 2 Years
Equity Oriented Mutual Funds	15%	Exempt*	More Than 1 Year
Debt Oriented Mutual Funds	Slab Rate	20%**	More Than 3 Years
Sovereign Gold Bond	Slab Rate	Exempt*	1 Year if Listed, 3 Years If Unlisted
Tax Rates mentioned above exclude cess and surcharge. Only listed stocks and bonds are considered. Long term capital gains exceeding Rs 1 Lakh on sale of quity shares and units of equity oriented mutual funds will be txable at 10.4% without indexation for A.Y. 2019-20 ** with indexation.

 

Calculation of Capital Gains:-

Profits or gains arising from transfer of a capital asset such as property, gold, shares and bonds are considered capital gains and taxed under the income head " capital gains" .

Such gains are two types

1. Short term capital gains

2. Long term capital gains

depending on the period of holding. Capital gains are calculated by deducting the cost of acquiring the asset from its sale value. But rules are different for different assets.

Real estate:- 

Gains made from transfer of immovable property ( land, house, apartment) within two years of purchase are considered short term capital gains is 20 % with indexation, while short term capital gains is taxes at the slab rate.  

To calculate long term capital gains, first calculate the indexed cost of acquisition " by multiplying the cost of acquisition with the notified cost inflation index (CII) for the year of sale and dividing this by CII of the year of purchase,"  Bit if asset was bought before 2001, then you need to use the fair market value (FMV) as on 1 APRIL 2001  and then calculate the

indexed cost of acquisition. For instance, if the property was brough in 1995, you need to calculate the property's FMV as on1 April 2001  and arrive at the cost of acquisition.Any expense necessary at the time of the asset's acquisition or transfer can be added to the indexed cost of acquisition. For instance, stamp duty, registration fee. brokerage charges and legal fees.

Shares and mutual funds :- 

Gains from transfer of shares and equity oriented mutual funds within a year of purchase are considered short term capital gains. For the current AY 2018-19, short term capital gains

tax for such assets id 15%. Whereas long term capital gains from equity exempt from tax. 

But From next AY  2019-20 long term capital gains will be taxed. Becasue, the finance Act, under section 10(38). A new section 112A, was introduce with effect from 1 April 2018. " It provides that long term capital gains from equity exceeding RS 1 lakh per year shall be taxable at the rate of 10% ( plus applicable surcharge and cess) without any indexation benefit.

In case of short term capital loss, it can be set off against other short term capital gain. It can also be carried forward  to subsequent financial years for set-off. Long term capital loss are not allowed to be st off or carried forwaed.

Expenses incurred in transacting shares or equity mutual fund units can be claimed for deduction when calculating capital gains.

For debt oriented funds, both holding period and tax implication are different. Gains made from selling debt oriented fund units within 36 months of holding are considered short term capital gains and taxed at slab rates." Sale of debt oriented fund units shall trigger long term capital gains when the holding period is more than 36 months. The rate of tax is 20% (
plus applicable surcharge and cess ).

 Shares and mutual funds :- 

"Jewellery or bullion are chargeable to capital gain tax, irrespective the method of acquisition -self-purchase, gifted or inherited," If sold before three years from the date of purchase , gains are considered short term capital gains, else long term capital gains. short term capital gain from sale of gold is taxed at the slab rate, and long term cqapital gain at 20% with indexation.

There are the different rules for bonds depending on the issuer and other features,

For instance, listed corporate bonds are considered short term if sold before 1 year form the date of purchase. short term capital gain is taxed at slab rate. If such bonds are sold after a year, the gains are considered long term capital gains and taxed at the rate of 10% without indexation, Apart from these, Specified tax-free bonds (listed or unlisted ) are covered u/s 10(15) of Income Tax Act and are exempt from tax.

Once you have figured out what your capital gains or losse are, the next step is to include them in your ITR Form.