How to claim Long term capital gain of Rs 1lac from shares/Equity Mutual funds FY 2019-2020 (AY 2020-2021)

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How to claim Long term capital gain of Rs 1lac from shares/Equity Mutual funds FY 2019-2020 (AY 2020-2021)

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If you have earned Long Term Capital Gains (LTCG) in the FY 2019-20, you are supposed to file your return. LTCG from the sale of shares/equity mutual funds (covered under section 112A) up to Rs 1 lakh is exempt from tax. However, if you have incurred/carried forward Long Term Capital Loss (LTCL) from some other avenue, there is a certain situation.

This LTCL is set off against the LTCG under section 112A without providing the benefit of the Rs 1 lakh exemption.

Setting off losses: You can set-off losses incurred under a head of income against
gains/profits from other heads subject to conditions. Both intra-head and inter-head set-off is possible.

Also, losses that couldn’t be set-off can be carried forward. Both short term and long term capital losses can be carried forward for 8 years.

Setting off LTCG from shares against other LTCL

This is where there is an issue. If you have earned LTCG from shares of less than Rs 1 lakh and have also incurred/carried forward LTCL from some other source (like from the sale of land, stocks), first you will have to set off the long-term capital gain with LTCL. If after setting off you have LTCG up to Rs 1 lac, that will be totally tax-free. Beyond Rs 1 lac you will have to pay tax at the rate of 10%.

Mr. Mukesh Gupta
Mr. Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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