CRUX EXTRACTED from FAQ’s on taxation of Long term capital gain issued by CBDT

1.     The tax will be levied only upon transfer of shares on or after 1^st April, 2018.

2.     With introduction of Clause 31 of Finance bill, 2018  the exemption under  10(38) of IT, Act were Removed & a new section 112A of IT, Act were introduced.

3.     Fair Market Value:-

In case of Listed share means highest price quoted on recognized stock exchange on 31^st Jan, 2018.

In case of no trading, the fair market value will be the highest price quoted on a day immediately preceding 31^st Jan, 2018 on which it has traded.

4.     Cost of Acquisition of asset will be:-

Ø Actual cost.

or

Ø Fair Market Value if it is more than actual cost.

Or

Ø Value of consideration or actual cost whichever is higher(if value of consideration is less than FMV).

5.     Example on computation of LTCG :- Equity shares of X Limited

Type	Actual Cost (as on 1st Jan, 2018)	FMV (as on 1st Jan, 2018)	Sold at	LTCG  will be
1.	Rs.1000/-	Rs.2000/-	Rs.2500/-	2500-2000= 500 (As FMV is more than actual cost therefore cost of acquisition will be FMV .
2.	Rs.1000/-	Rs.2000/-	Rs.1500/-	1500-1500=Nil (As sale value is less than FMV therefore cost of acquisition will be value of consideration or actual cost whichever is higher
3.	Rs.1000/-	Rs.500/-	Rs.1500/-	1500-1000=500 (As actual cost is more than FMV)

6.     Benefit of Indexation of cost of acquisition would not be available.

7.     In case if FII’s same treatment will be applied for computation of long term capital gain as in  above table.

8.     Any transfer between 1^st February, 2018 to 31^st march 2018 will be eligible for exemption under 10(38).

9.     Cost of Acquisition in case of Bonus shares acquired before 31^st Jan, 2018 will be the Fair Market Value as on that date.

10.   Cost of Acquisition in case of Right shares acquired before 31^st Jan, 2018 will be the Fair Market Value as on that date.

11.  No set-off or carry forward is allowed in case of loss between 1^st February , 2018 to 31^st March, 2018.

By:- KUNAL SHARMA

Management Trainee

Mobile No.9811660410

Surinder Vashishtha & Associates

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