InvestorQ : I have two questions on the tax on LTCG on equities. What about indexation and what about STT that I already paid on the trade?
Mary Joseph made post

I have two questions on the tax on LTCG on equities. What about indexation and what about STT that I already paid on the trade?

Answer
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sara Kunju answered.
1 year ago


It needs to be remembered that the LTCG tax is a flat tax. That means, the benefit of indexation will not be available while calculating the LTCG tax. For example, whether you make an LTCG of Rs.2 lakh at the end of 2 years or an LTCG of Rs.25 lakh after 10 years, the LTCG tax will be charged on the profits without giving you any benefit of indexation of acquisition price. Of course, you will get benefit of Rs.1 lakh as basic exemption. It may be recollected that when the securities transaction tax (STT) was introduced in 2004, it was introduced in lieu of the tax exemption granted to LTCG. However, this 10% tax on LTCG above Rs.1 lakh will be payable by you in addition to the STT that you will be anyway paying on your equity market transactions. If you are showing as capital gains in your tax return then your STT is not available as a deduction. However, in case you are showing as business income, then you can claim STT paid as an admissible expense.