Tax on capital gain or loss

Short term gain or loss

  • (Case A) Mr. Rao purchased some securities on May 04 2007 at a total cost of Rs 1, 00,000 and on July 3 2008, he sold the securities for Rs 1, 30,000. Here the short term capital gain (Short term gain arising from sale of securities which is less than 12 months old) was Rs. 30,000 and tax on short term gain of Rs 30,000 would be 15% of 30,000 which equals Rs. 4,500
  • (Case B) But Mr Rao has also purchased securities worth Rs. 95,000 on June 12 2008 and has sold them at Rs 45,000 on February 10 2009 hence there is a short term capital loss arising from sale of securities less than 12 months old was equal to Rs 50,000
  • Now as per the tax laws Mr Rao’s short term capital gain (Case A0 is offset by an equivalent short term capital loss (Case B) hence there is not short term capital tax payable by Mr. Rao for the financial year 2008- 2009. Also he carried forward Rs. 20,000 loss for offsetting any short term gains he makes in next eight years.

Long term capital gain or loss

  • Mr. Pandu purchased securities on April 3 2007 at Rs. 1, 00,000 and sold them on January 5 2009 at Rs 1, 20,000. The long term capital gain arising from sale of securities which are more than 12 months old from this transaction was Rs. 20,000
  • Here the entire amount of Rs 20,000 is not taxable to Mr. Pandu as long term capital gain are exempt from tax

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