Thank you for all the advice in your column which I find very interesting. I have recently redeemed some mutual fund equity investments that fall into two categories. The first set are those I held for nearly 9 years and the second set is recent vintage as its average holding age is under 4 years.
1. What is the capital gains tax that I have to pay and how is it computed?
2. Is the exemption amount of Rs 2 lakhs available for capital gains also?
3. How to pay the CG tax amount and when is it due for payment?
Many thanks for your advice.
Ans: Answer for 1 and 2
Short-term capital gains on redeeming your equity fund units within a holding period of one year are taxed at a flat rate of 15%, irrespective of your income tax bracket. Those funds exceeding one year holding period is treated as a long-term capital gain. The LTCG are exempted from tax up to Rs. 1,00,000 and any LTCG exceeding this limit shall attract a LTCG tax of 10%, and there is no indexation.
3. Paying capital gains is same as paying regular income tax. You have to go to the Income Tax India website and pay tax using challan ITNS 280.