ITR Filing: Computation Of Capital Gains For Disclosure In Tax Return

Income tax return filing requires mandatory disclosure of assets held, income from different sources whether or not liable to tax as well as capital gains realized in a given year. So, in case you also have made capital gains on selling some capital asset during the financial year 2017-18, here's discussed for your ready-reference as to how to go about computing capital gains on different asset class and its reporting in the ITR.

ITR Filing: Computation Of Capital Gains For Disclosure In Tax Return

Capital gains: Capital gain is the profit realized when the investor sells or transfers any capital asset at a sum greater than the purchase price. Capital asset can be a property, land, gold etc. but does not includes

a) Personal effects that are movable property for personal use and excludes archaeological collection, sculptures, art work, painting, drawing, jewellery
b) Raw material or consumable stores, stock in trade held by the assessee for profession or business
c) Gold deposit bonds, National defence bonds, special bearer bonds, 6% or 7% gold bonds and agricultural land in some of the areas.

Computation of capital gains tax

The computation of tax or tax rate on capital gains is dependent on the nature of the asset class as well as the holding period. Further, based on the holding period i.e. the duration for which the asset under consideration is held by the assessee, the taxation implication can be short term capital gains tax or long term capital gains tax.

For capital gains tax, holding period is accounted for the capital asset from the date when the assessee acquires the asset and the date immediately preceding the date of transfer of the asset.

For the capital asset to qualify as a long term asset, minimum holding period varies for different asset classes and is as specified below

- In case listed equity shares or equity oriented mutual fund schemes are held for a minimum of 1 year, it would classify the asset as long term capital asset

- In case of unlisted equity shares or immovable property such as land or building or both, for the asset to be deemed as long term asset, the minimum holding period needs to be 2 years from the date of acquisition

- For other capital assets such as gold etc., the minimum holding period has to be of 36 months or 3 years.

Tax rate on Capital gains For FY 2017-18

Asset class	Tax rate on LTCG	STCG tax
Listed equity shares and equity oriented mutual fund schemes where STT is paid	Exempt for FY 2017-18	15%
Listed securities without STT and zero coupon bonds	20% with indexation and 10% without indexation	As per tax slab rate of the taxpayer
Unlisted equity shares, non-equity mutual fund, unlisted debenture or bond, jewellery, immovable property etc.	20% with indexation	As per tax slab rate of the taxpayer

Reporting or Disclosure of Capital gains in ITR

After the capital gains or capital loss is computed, you need to mandatorily disclose them in the ITR. Based on your income source, you need to file a different ITR form, Say if you have business or professional income and also realized capital gains for the year ending March 31, 2018, you need to file the return in ITR 3 while in case you have salary income plus any capital gain, you need to file return of income in ITR2. Also, any exempt capital gains realized by the individual need to be reported in the ITR

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