If you have incurred the Capital Gains in 2017-18, the Indexation base year for the calculations of Capital gains will be 2001-2002 from FY 2017-18 or AY 2018-19 for ascertaining Long and Short Term Capital Gains. Previously, the assets acquired before April 01, 1981 were valued the fair market value of 1981. Post this indexation are taken into consideration to ascertain the capital gains. Now, from FY 2017-18, the base year for fair market value will be taken as 2001, which means any capital assets like property, gold, bonds etc bought before April 01, 2001 will be valued at the fair market value of 2001. Subsequent to this, Cost Inflation Index will be applicable.
Also from FY 2017-18 onwards: The criteria of three years have been decreased to two years on account of resolute property being area, building, and house property.
Insight of Capital Gain Account
Any benefit or pick up that emerges from the offer of a ‘capital resource’ is a capital pick up. These pick up or benefit is charged to impose in the year in which the exchange of the capital resource happens.
Capital additions are not relevant when an advantage is acquired in light of the fact that there is no deal, just an exchange. Be that as it may, if this benefit is sold by the individual who acquires it, capital additions duty will be relevant yet buy date would be of unique purchaser not date of Transfer. The Income Tax Act has particularly exempted resources got as endowments by method for a legacy or will.
Let us summarize the treatment of Long and Short Term capital gains for various types of assets.
|Type of Asset||Short Term Capital Gain||Long Term Capital Gain||Tax on Short Term CG||Tax on Long Term CG|
|Debt Mutual Fund||Before Aug 2014:Selling before 1 year||Before Aug 2014:Selling after 1 year||Added to income and taxed as per tax slab.||Before Aug 2014 If indexation used 20%, Without indexation 10%After Aug 2014 If indexation used 20%|
|After Aug 2014: Selling before 3 years||After Aug 2014:Selling after 3 year|
|Equity Mutual Funds with STT paid||Selling before 1-year||Selling after 1 year||Taxed at 15%.||nil|
|Stocks with STT paid||Selling before 1-year||Selling after 1 year||Taxed at 15%.||nil|
|Fixed Maturity Plan(FMP)||Selling before 3 year||Before Aug 2014:Selling after 1 yearAfter Aug 2014:Selling after 3 year||Added to income and taxed as per tax slab.||Before Aug 2014 If indexation used 20%, Without indexation 10%After Aug 2014 If indexation used 20%|
|Real Estate,||From FY 2017-18 selling before 2 years||From FY 2017-18 selling after 2 years||Part of total income and normal tax rates are applicable.||Indexation benefit is available and tax rate is 20%|
|Before FY 2017-18 Selling before 3 years||Before FY 2017-18 Selling after 3 years|
|Gold & Others||Selling before 3 years||Selling after 3 years||Part of total income and normal tax rates are applicable.||Indexation benefit is available and tax rate is 20%|
Inflation Index of cost from FY 2017 – 2018
Cost Inflation Index Applicable from FY/ PY 2017-18 (AY 2018-19) onwards, with Base Year shifted to 2001-02 as notified by CBDT
Based on this information it will be easier for you to calculate your capital gain amount. For calculator related to capital gain amount you can visit the website of your financial institution of capital gain account.
Who will gain from this???
While most of the people is looking this as a loss for asset sellers due to change in index values, but looking deep into this it seems that it is a big advantageous situation for assets owners especially those where assets value has increased substantially during 1980 to 2000. This means that the property with FMV as 100000 will be valued at Rs. 4,26,000.00 with previous Index. In case the appreciation in the value is beyond this say 10 lacs, the remaining amount will stand non – taxable in newer scenario (instead of 5.74 lacs previously).
But this gain is not that small. It is far bigger than this.In current year, the non taxable amount will be 27.20 lacs as compared to approx. 12 lacs previous year. This big difference is due to the change in base year and respective consideration of fair market value.