No indexation benefit for proposed tax on LTCG on equity: CBDT

The Central Board of Direct Taxes (CBDT) has clarified the various issues related to the proposed new tax regime for the taxation of long-term capital gains as FAQ.

CBDT has clarified that the benefit of inflation indexation of the cost of acquisition would not be available for computing long-term capital gains under the new tax regime.The tax will be levied only upon transfer of the long-term capital asset on or after 1st April, 2018.

The long-term capital gains will be computed by deducting the cost of acquisition from the full value of consideration on transfer of the long-term capital asset. 

The cost of acquisition for the long-term capital asset acquired on or before 31st of January, 2018 will be the actual cost.

However, if the actual cost is less than the fair market value of such asset as on 31st of January, 2018, the fair market value will be deemed to be the cost of acquisition.

Here is the copy of CBDT's Frequently Asked Questions (FAQs) regarding taxation of long-term capital gains proposed in Finance Bill, 2018.

The Finance Bill, 2018 proposes to provide for a new long-term capital gains tax regime for the following assets–

1) Equity Shares in a company listed on a recognized stock exchange

2) Unit of an equity oriented fund

3) Unit of a business trust