Tax Treatment of Equity , Gold and Debt

POSTED BY manish ON June 12, 2008 COMMENTS (19)

Tax Treatment of Equity , Gold and DebtTax Treatment

Equity Mutual Funds and Shares

Short Term Capital Gain : If you sell it before 1 yr , the profit is called STCG and taxed at 15% (revised in 2008-09 budget) ,So if you make profit of 10,000 on shares or Equity mutual funds , you pay 1,500 as tax.

Long term Capital Gain : No tax

Other Points

– Dividend income from any kind of mutual funds are not taxable.

Profit from Sale of House or Land

Long term Capital Gain : If you sell it after 3 years , its Long term Capital gain. and its taxed at 20% on profit.

Your profit = Sale Price – (Cost price after adjusting indexation , as per the cost inflation index)

Long term capital gain tax can be saved by investing the capital gains in some other residential property or in bonds of the Nabard, National Highway Authority of India, Rural Electrification Corporation of India or SIDBI redeemable after a period of three years.

Long term capital loss can also be set off against any Long Term Capital Gain in next 8yrs.

Short term Capital Gain : If you sell it before 3 yrs, its considered as STCG and added to your income and taxed accordingly.

Short term capital gains can set off against any LTCG or STCG within 8 yrs.

Other Points

– Capital Gains from Agricultural Lands are not taxable.

A person holding more than one residential property would be liable to Wealth Tax on the market value of the second property.


Profit from Jewellery

Short term Capital Gain : 20% tax on the profit if sold before 3 yrs (1 yr in case of GOLD ETF) .

Long term Capital gain : 30% tax on profit if sold after 3 yrs ( 1 yr in case of GOLD ETF)

Don’t know what is GOLD ETF ? Read this article , CLICK HERE

Profit from Fixed Deopsits , PPF , NSC

Fixed Deposit : Interest Earned added to the income and taxed accordingly.

PPF : Interest earned not taxable

NSC : Interest earned taxable

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19 replies on this article “Tax Treatment of Equity , Gold and Debt”

  1. sharma says:

    Hello
    ..I had a query and wasn’t given a proper reply by Chartered accountant. I have sold a flat and need to invest money in property within 6 months to avoid paying taxes to govt.
    Can I use the same amount to buy two flats instead of 1 Flat? Meaning rather than buying one 2 bhk… I prefer two adjoining 1bhk flats in same amount.
    Will the govt consider it as a single investment..and not charge me extra tax or I will have to pay tax over one of the 1bhk?

    Thank you

    1. Yes, I think that should be ok ! ..

  2. Rajeev says:

    Can we invest the LTCG from the sale of gold, for purchase of property to save tax

  3. Sayyad says:

    Hello,

    If jewellery is sold after 3 years, there’s 30% tax. What’s the tax rate for bullion? Can capital gains from gold buillion be offset by buying real estate? Is there any other way apart from real estate?

  4. Debanjan Ray says:

    Dear Ajit,

    Regarding tax on HDFC prudence fund, pl. see by comment in this page only posted on March 18, 2011 at 11:14 pm. . I have given a link from where you shall get the details.

  5. Ajit says:

    Manish

    Could u pls tell about short/long captigal gain tax treatment for ‘Birla Sun Life 95’ fund. It’s an balanced-equity-oriented fund but has equity exposure less than 65%.

    Same thing for HDFC prudence fund also.

    Thanks
    Ajit

  6. Dominic says:

    Does this tax info same for Debt fund also?

  7. kishor says:

    In case of CG from Jewelry LTCG is more then STCG…??? it is mentioned that STCG is 20 % while LTCG is 30 %. So if you hold more pay more tax?

    1. STCG is before 3 yrs and its added to your salary , LTCG is after 3 yrs and indexation + 20% is tax

      Manish

      1. kishor says:

        yes..ok then u may please correct above original article accordingly. Because some people read article only & not all comments’

        regards

  8. Amol says:

    Manish,

    I read one term called as “Securities Transaction Tax (STT)” while I was searching for tax treatment on debt oriented MF (http://www.hsbc.co.in/1/2/personal/investments/useful-info/useful-info-tax. ) It says “Long-term capital gains arising on the transfer of units of an ‘equity oriented’ mutual fund is exempt from income tax, if the Securities Transaction Tax (STT) is paid on this transaction i.e., the transfer of such units should be made through a recognised stock exchange in India (or such units should be repurchased by the relevant mutual fund).”

    As per my knowledge, investment in equity MF above 1 year is totally tax free.
    What about the tax structure for debt MF OR debt oriented MF(less than 65% corpus in equity) ?

    Thanks in advance

    Amol

      1. Debanjan Ray says:

        Dear Manish,

        The answer to the question is best available at:
        http://taxguru.in/income-tax/taxation-of-income-and-capital-gains-from-mutual-fund-units.html
        We can see that Balanced MF, which is mixture of equity and dept, is not taxable, if equity component is more than 65%.

        with best wishes
        Debanjan Ray

        1. Thanks for the link 🙂

  9. Pingback: Income Tax « Resources

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