Gain on sale of Shares and Mutual Funds:
in shares and mutual funds is very common among most of
us. On maturity/redemption/ sale of these shares &
funds either there will be profit or loss. Profits/loss
in such cases is called as capital gain/loss.
The taxability of Capital Gains depends upon the holding
of such shares & mutual funds. If Shares/mutual funds
are sold within 12 months of their holding the gain/loss will be Short
Term and if Shares/mutual Funds are sold after holding them for 12
months the gain/loss will be Long Term.
Term Capital Gain(STCG):
shares and mutual funds are sold within 12 months of their purchase, it
will be Short Term capital asset and gain or loss on their
will be Short
Term Capital Gain/Loss.
Term Capital Gain on Shares and Equity oriented
mutual funds on which
Security Transaction Tax(STT) is paid is taxable at a flat rate of 15%.
Taxability issues of Short Term Capital Gain are explained in detail at
the following link.
- Read in detail
about taxability of Short Term Capital Gain on shares & mutual funds.
- STCG on sale of shares and mutual
funds is calculated as explained below:
|Sale Value of the Shares/Mutual Funds
Purchase price of such Shares/Mutual Funds
the calculation of Short Term Capital gain is very simple
becomes difficult to calculate the same when shares
were purchased on different dates or when Bonus shares are received. In
such a case FIFO
(First in First out) method shall be followed. Shares purchased first
are considered to be sold first.
- Its suggested to keep the sale/redemption note
of the mutual
fund as a proof of payment of Securities Transaction
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- Similarly contract note for sale of equity
shares shall also be kept for as a proof payment of Securities
Some Quick Links:
of STCG on shares & mutual funds
What is Capital Gain &
how it is taxed?
Capital Gain Index for
Gain on sale of Bonus Shares
are Equity Oriented Mutual Funds?