Could someone please clear me on this issue?
As we know from 2019-20 A.Y. onwards the LTCG on Mutual funds will be taxed @ 10% when the gain exceeds ₹1 lakh.
Now, suppose I am a salaried person and gained ₹90,000 in that year by selling mutual funds. Then while filing IT RETURN shall I first add that ₹90,000 to my total income (i.e. with the Income from salary) and then claim deduction? or I will only consider the income from salary ignoring the capital gain part of
₹90,000?
Thanks in advance.
Dear Ranjan
Please note that not all Mutual Funds are covered u/s 112A. Only Equity Oriented Mutual Fund as defined under that section is covered and is taxed @ the concessional rate of 10%. LTCG arising from the transfer(sale) of any other mutual fund unit be taxed @ 20% u/s 112.
1. As per the example given by you, you will have to include LTCG of MF Rs.90,000/- to compute your gross total income and then, net income taxable. This is because the benefit of Rs.1,00,000/- is given in Sec.112A (which operates at the tax computataion stage) and is not given as an exemption. In fact, the exemption earlier available to such income u/s 10(38) stands withdrawn. So the effect is that your gross income increases to the tune of LTCG earlier so exempted u/s 10(38).
Thus, to keep it simple, just understand that Rs.90,000/- will indeed form part of your gross total income and net income.
2. Once you determine your net income, next step is computation of income tax payable. Sec.112A operates at this step. So, while computing the tax paybale, you can ignore Rs.90,000 being less than Rs.1,00,000/- and compute tax on your salary.
3. Also, you can avail benefit of unused exemption limit as per proviso to Sec.112A(2) assuming you are a resident individual.
Regards
Ajay
CAclubindia
