LTCG ( Long Term Capital Gain ) Calculator - Capital Gains Tax Calculation Online (2024)

What is LTCG?

The assets owned by an individual that may or may not be connected withbusiness or profession are called capital assets. The common examples ofcapital assets include bonds, mutual funds, jewellery, patents, ortrademarks. However, furniture and clothes for personal use, ruralagricultural land are not capital assets.

The LTCG or long-term capital gains tax is charged on the profitgenerated from an asset such as shares, bonds, commodities, or realestate that is held for the long-term. The period of holding, which is‘short term’ or ‘long term’ differs across various assets. It is definedas per the Income Tax Act, 1961.

The table below shows you how the capital assets are classified asshort-term or long-term based on the holding period.

• Long-term capital gains tax is levied on the capital gains from sharesand equity-oriented mutual funds, that are held for one year or more.
• The long-term capital gains tax is charged at the rate of 10%, on thegains above Rs 1 lakh in a financial year. Short-term capital gainstax is charged at the rate of 15%.

What is an LTCG Calculator (Long Term Capital Gains Tax Calculator)?

The long-term capital gains or LTCG Calculator is a utility tool, whichshows you the long-term capital gains and the LTCG tax liability, forequity-oriented mutual funds and listed equity shares.

The LTCG Calculator consists of a formula box, where you enter theholding period, the purchase value, and the sale value of theequity-oriented fund. The calculator will display the taxable short-termcapital gain or long-term capital gain, depending on the holding period.

How Does LTCG Calculators Work?

You can understand the working of an LTCG calculator with this example.You purchased 200 shares of XYZ Company Ltd at Rs 1,000 per share in May2018. You sold all the 200 shares at Rs 1,800 per share in January 2020.

You have held the shares for more than one year. The profit of Rs1,60,000 (200*1800 – 200*1000) is called long-term capital gains.

You have to pay the long-term capital gains tax on the gains that areabove Rs 1 lakh in a financial year. You have the LTCG tax on Rs 60,000.(Rs 1,60,000 – Rs 1,00,000) at 10%. You pay a long-term capital gainstax of Rs 6,000. (Rs 60,000@10%).

Suppose you sold the 200 shares in January 2019 when the share price wasRs 1,500 per share. The total purchase value of your 200 shares in May2018 was Rs 2,00,000. You have held the shares for less than one year.The profit of Rs 1,00,000 (200*1500 – 200*1000) is called short-termcapital gains.

You must pay short-term capital gains tax at 15% on the short-termcapital gains which is Rs 1,00,000 *15% = Rs 15,000.

The announcement for the introduction of the long-term capital gains taxon equity-oriented instruments and shares was made during the UnionBudget 2018. The new rule was applicable for all the transactions thatare made on or after 01 April 2018.

How to Use the ClearTax LTCG Calculator?

• You must choose the period when you sold the shares or equity-orientedmutual fund units. If you select before 31 March 2018, there is nolong-term capital gains tax on the investment. If you choose after 01April 2018, you will incur a long-term capital gains tax.
• You then select the holding period as less than one year if you haveheld the investment for the requisite period.
• You must enter the sale value and the purchase value of theinvestment.
• The ClearTax LTCG Calculator will show you the short-term capital gainand STCG taxes.
• You must select the holding period as more than one year if you haveinvested for this duration.
• You then select the sale value of the investment.
• You must select the date of purchase of the units as after 31 January2018 or before 31 January 2018 as applicable.
• If you select the latter option, the calculator will ask you for thefair market value.
• The ClearTax LTCG Calculator will show you the long-term capital gainand LTCG taxes.

Benefits of Using the ClearTax LTCG Calculator?

• The ClearTax LTCG Calculator will show you the long-term capital gainstax on the purchase and sale of equity-oriented funds and shares in amatter of seconds.
• You get a birds-eye view of the actual return from the investmentafter accounting for the taxes. It helps you to plan the duration ofthe investment in equity funds and shares for maximum tax-efficiency.
• You can plan the investments in equity instruments as you already knowthe short-term or long-term capital gains tax you would incurdepending on the holding period.

FAQs on the ClearTax LTCG Calculator?

Why does the ClearTax LTCG Calculator ask you for the date ofsale of equity shares or units?

The long-term capital gains on the sale of equity-orientedfunds and shares were made taxable during the Union Budget2018. The rule would apply for all transactions made on orafter 01 April 2018. If you had invested in equity-orientedsecurities or shares before 31 January 2018, all gains tillthat date are considered to be grandfathered and exempt fromtax.

However, STCG would continue to be taxed at 15% (excludingsurcharge and cess). Any long-term capital gains above Rs 1lakh that arise from the transfer of equity-oriented mutualfunds and shares after 01 April 2018 are taxed at 10%. TheClearTax LTCG Calculator considers this rule and calculatesthe long-term capital gains tax.

Why does the ClearTax LTCG Calculator ask for the holdingperiod between the date of purchase and sale of equityunits?

The ClearTax LTCG Calculator asks you to select the holdingperiod as less than one year or one year or more. If youchoose the option as less than one year, the calculator willshow you the short-term capital gains tax on the investment.If you select the latter option, the calculator displays thelong-term capital gains tax on the asset.

See Also

Mutual Fund SIP: How to calculate LTCG Tax on mutual fund SIPs

Why does ClearTax LTCG Calculator ask you to fill the FMV (FairMarket Value)?

To make sure that only the gains after 01 February 2018 areconsidered for taxation, the government introduced agrandfathering clause. You must calculate the cost ofacquisition as per the formula shown below:

The cost of acquisition of the asset is the higher of:

a) The actual cost at which the asset is acquired.

b) The lower of the fair market value as of 31 January 2018and the total amount you receive when selling theequity-oriented fund or share.

Let us understand the calculation of long-term capital gainsfor different scenarios:

Example 1: You have purchased an equity share on 01February 2017 at Rs 150. The fair market value as of 31January 2018 was Rs 250. You sold the share on 01 May 2018at Rs 300.

The actual cost of acquisition at Rs 150 is lower ascompared to the fair market value (FMV) on 31 January 2018.The FMV of Rs 250 is taken as the cost of acquisition. Thelong-term capital gains tax will be the difference betweenthe selling price of the asset and the fair market value,which is Rs 50 (Rs 300 – Rs 250).

Example 2: You have purchased an equity share on 01February 2017 at Rs 200. The fair market value as of 31January 2018 was Rs 150. You sold the share on 01 May 2018at Rs 300.

The fair market value on 31 January 2018 at Rs 150 is loweras compared to the actual cost of the acquisition at Rs 200.The actual cost of Rs 200 will be taken as the actual costof the purchase. The long-term capital gain will be thedifference between the selling price of the asset and theactual cost of the acquisition, which is Rs 100 (Rs 300 – Rs200).

Example 3: You have purchased an equity share on 01February 2017 at Rs 200. The fair market value as of 31January 2018 was Rs 250. You sold the share on 01 May 2018at Rs 100.

In this example, the actual cost of acquisition at Rs 200 islower as compared to the fair market value as of 31 January2018 at Rs 250. The sale value of the asset at Rs 100 isalso lower as compared to the fair market value of Rs 250and the cost of the acquisition at Rs 200. The actual costof acquisition of Rs 200 is taken as the cost of theacquisition. The long-term capital loss is Rs 100 (Rs 100 –Rs 200) for this scenario.