Hi, My projected total annual income for FY 23-24 is expected to be ? 9.6 Lacs out of which ? 6.25 would be capital gains from sale of equity mutual funds and rest would be through salary and interest income from bank and post office FD, RD and savings account. Till last year there was no tax liability as total Annual income was less. ( ? 3-3.5 Lacs ). As per calculation, capital gains tax on sale of equity mutual funds alone comes out to be ?52500 ( 10% of over and above ?1 Lac of capital gains) My query is whether I need to pay this tax of ?52500 arising on account of capital gains booked or the capital gains would be added along with other income ( salary+ interest) and then regular deductions / exemptions applicable as per Old / New tax regime would come into play so that the net tax liability becomes Zero for FY 23 - 24 as well?

Ans: Based on your scenario, here's how your capital gains tax will be calculated:

Capital Gains from Equity Mutual Funds:

You mentioned Rs. 6.25 lakh as capital gains from equity mutual funds.
Long-term capital gains (held for over 1 year) on equity mutual funds exceeding Rs. 1 lakh are taxed at 10% without indexation benefit.
Tax Calculation:

Taxable capital gains = Rs. 6.25 lakh (total capital gains) - Rs. 1 lakh (exempt limit) = Rs. 5.25 lakh
Capital Gains Tax:

You'll need to pay tax on Rs. 5.25 lakh at 10% = Rs. 52,500
Overall Tax Liability:

Here's how to determine your overall tax liability for FY 23-24:

Combine your Income Sources: Add your salary income, interest income from FDs, RDs, and savings account to the Rs. 52,500 capital gains tax.
Deductions and Exemptions: You can then factor in any deductions and exemptions you're eligible for under the Old or New tax regime (whichever offers a lower tax liability).
Net Tax Liability: After applying relevant deductions and exemptions, calculate your final taxable income. If the final taxable income falls below the minimum taxable limit, your net tax liability becomes zero.
Key Points:

Capital gains tax is calculated separately from your salary and interest income.
You can choose the tax regime (Old or New) that minimizes your overall tax liability. Explore both options using a tax calculator or consult a tax advisor for a more accurate assessment.
Remember, this is a general overview. Tax rules and exemptions can be subject to change. For a definitive assessment of your tax situation, consider consulting a qualified tax advisor who can consider all your income sources, deductions, and exemptions applicable to your specific circumstances.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in