15 October 2023
I HAVE LTCG IN NIFTY ACCELERATOR PLUS 132 MLD BY NBFC . IT IS NONLISTED NON CAPITAL PROTECTED NIFTY LINKED MLD REDEEMED ATER 3 YEARS BUT BEFORE MATURITY' WHAT IS TAXATION STATUS AS PER NEW AMMENDMENT. I READ UNLISTED NON CAPITAL PROTECTED MLD ARE NOT DEBT SECURITIES BY DEFINITION OF SEBI. SO CAN I SHOW IT AS LTCG FROM OTHER THAN UNQUOTED SHARES IN ITR 3 AND TAKE INDEXATION BENIFIT
06 July 2024
If you have Long Term Capital Gains (LTCG) from a Non-Listed Non-Capital Protected Nifty Linked Market Linked Debenture (MLD) redeemed after 3 years but before maturity, here's how it typically gets taxed based on the recent amendments and current tax laws in India:
### Taxation Status:
1. **Nature of Investment:** - Non-Listed Non-Capital Protected MLDs are treated as capital assets for taxation purposes.
2. **Tax Treatment:** - **Capital Gains Classification:** Since it's a non-capital protected MLD, the gains will be classified as capital gains. - **Long-Term or Short-Term:** If held for more than 3 years, gains are considered Long-Term Capital Gains (LTCG).
3. **Indexation Benefit:** - **Applicability:** Yes, you can avail of indexation benefit for calculating LTCG tax. - **Indexation Method:** Adjust the purchase price of the MLD using the Cost Inflation Index (CII) of the year of purchase and the year of sale/redemption to factor in inflation. This reduces the taxable LTCG.
4. **ITR Filing:** - You should report this income under the head "Capital Gains" in your Income Tax Return (ITR), specifically in Schedule CG (Capital Gains). - Mention the nature of asset as "Other than Quoted Shares or Securities".
5. **Tax Rate:** - LTCG from non-listed securities like MLDs is taxed at 20% with indexation benefit.
### Steps to Report in ITR:
- **Schedule CG:** Enter details of the sale/redemption of the MLD, including sale consideration, cost of acquisition adjusted for indexation, and resulting LTCG. - **Specify Nature of Asset:** Indicate that it's "Other than Quoted Shares or Securities". - **Tax Computation:** Calculate tax on LTCG at 20% after applying indexation benefit.
### Note:
- Ensure to keep documentation related to purchase, redemption, and indexation calculations for audit and future reference. - It's recommended to consult with a tax advisor or chartered accountant to ensure compliance with current tax laws and accurate reporting in your ITR.
By following these guidelines, you can appropriately report and benefit from indexation on your LTCG from the Non-Listed Non-Capital Protected Nifty Linked MLD in your ITR.
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