Equity, property, mutual funds

Category: Income Tax. From ₹2,999. Typical timeline: 2–5 days.

Overview

Capital gains tax computation covers the tax due on profit from selling equity shares, mutual funds, property, or other capital assets, an area where holding period, indexation rules, and the asset class each change the applicable rate. With the Finance Act 2024 having revised long-term and short-term rates and removed indexation benefit for most property sales, accurate computation matters more than before to avoid overpaying or under-reporting gains in the income tax return.

Who needs it

• Investors who sold equity shares or mutual fund units during the financial year
• Property sellers needing gain computation, exemption planning and TDS compliance under Section 194-IA
• NRIs disposing of Indian property or securities who require lower-deduction certificate support
• Taxpayers planning reinvestment under Sections 54, 54EC or 54F to claim exemption

Eligibility

• Individuals, HUFs, firms and companies who have sold shares, mutual funds, property, gold or other capital assets during the year
• Taxpayers holding listed or unlisted securities, immovable property, or business assets subject to capital gains provisions
• NRIs selling Indian assets who need TDS and capital gains computation support

Documents required

• Purchase and sale deeds or contract notes with dates and consideration values
• Broker/mutual fund statements showing acquisition cost and sale proceeds
• Details of improvement costs or expenses incurred on transfer
• Proof of reinvestment for exemption claims (new property purchase, capital gains bonds)
• TDS certificates (Form 16A/26QB) where tax was deducted on the transaction

Process

1. Transaction compilation — Gather all sale and purchase records for equity, mutual funds, property or other assets sold during the year.
2. Gain classification — Determine holding period to classify each transaction as short-term or long-term and apply the correct tax rate.
3. Exemption assessment — Evaluate eligibility for exemptions under Sections 54, 54EC or 54F based on reinvestment made or planned.
4. Computation and reporting — Prepare the final capital gains schedule for inclusion in the income tax return, reconciled against AIS/TIS.
5. Return filing — File the return with the capital gains schedule and pay any balance tax due after TDS credit.

Government fees

• Government fee: Not applicable — professional fee covers computation and filing; no separate government charge

Professional fee

Professional fee starts at ₹2,999 for computation and reporting of capital gains from a limited number of transactions, scaling with transaction volume and complexity such as property sale exemption planning.

Timeline

Computation and reporting is typically completed within 2-5 working days once transaction statements are provided; property sale cases with exemption planning can take longer.

Deliverables

• Detailed capital gains computation statement by asset and holding period
• Exemption claim working under applicable sections
• Capital gains schedule ready for return filing
• Reconciliation note against AIS/TIS/Form 26AS

Frequently asked questions

What is the current tax rate on long-term capital gains from listed equity?

Long-term capital gains on listed equity and equity mutual funds are taxed at 12.5% on gains exceeding ₹1.25 lakh in a financial year, following the Finance Act 2024 revision.

Is indexation benefit still available on property sales?

Indexation was removed for most property transfers under the Finance Act 2024, though a transitional option to compute tax with indexation at 20% for property acquired before 23 July 2024 may apply in certain cases.

Can I set off a capital loss against capital gains?

Short-term capital losses can be set off against both short-term and long-term gains, while long-term losses can only be set off against long-term gains, with unabsorbed losses carried forward for eight years.

Common mistakes

• Misclassifying a transaction as long-term or short-term due to incorrect holding period calculation
• Ignoring broker or registrar-reported figures in AIS, leading to mismatch notices
• Missing the reinvestment deadline for claiming exemption under Section 54 or 54EC
• Not accounting for TDS already deducted under Section 194-IA on property sale while computing final liability

Penalties for non-compliance

• Interest under Sections 234B/234C for underpayment of tax due to unreported or misreported capital gains
• Notices and potential penalty for mismatch between reported gains and AIS/TIS data from exchanges and registrars
• Loss of exemption benefit if reinvestment conditions under Sections 54/54EC/54F are not fulfilled within the prescribed period

Legal references

• Income Tax Act, 1961, Sections 45 to 55A — computation of capital gains
• Sections 54, 54EC, 54F — exemptions on reinvestment of capital gains
• Finance Act 2024 — revised capital gains tax rates and removal of indexation for most assets
• Section 194-IA — TDS on transfer of immovable property