It is necessary to give the correct information about the capital gains in filing the Income Tax Return (ITR). If you invest in share, mutual funds or property, then before filing ITR, you should calculate the capital gense correctly. Income tax notice can come from wrong reporting.
Short Term and Long Term Capital Gens
Experts say that in the last 4-5 years, people have increased interest in investment, especially shares. People invest in shares and sell them when they climb prices. This gives them a capital gain. Capital Gains are divided into a short -term capital gains and long term capital gains according to the duration of investment. Tax rates on both types of gains vary. In the last year’s union budget, the government’s Capital Gens Tax rules were changed.
Capital Gens data matching
Tax experts say that the Income Tax Department has increased the monitoring of the reporting of the capital gense. The data of the ganes from equity, mutual funds and even shares of shares is being matched. Annual Information Statement contains information about taxpayers’ shares and mutual funds. The Income Tax Department matches the data of AIS with ITR data.
Notice can come for not giving information
Personal Tax et1 Finance vertical head Niyati Shah said that the manner in which the monitoring of the Income Tax Department has increased, the right documentation and professional guidance have become necessary. The reason for this is that the notice of Income Tax Department can come on wrong reporting. This can increase the difficulty of taxpayers. If the taxpayers are not satisfied with the reply, the department can also apply penalty.
Short Term and Long Term Capital Gains different
Taxpayers first need to see how much short term capital gence and how long term capital gains they have had during the financial year. If the units of shares or equity mutual funds are sold before 12 months of purchasing, then the Gains from it is called a short term capital gence. It is taxed at a rate of 20 per cent. If shares or units are sold after 12 months, the profit from it is considered a long term capital gain. It is taxed at 12.5 per cent rate.
No tax on LTCG up to Rs 1.25 lakh
Taxpayers will have to ask for a statement of capital gence from the first brokers for the data of the capital gains. Then, he will have to match Form 26AS and AIS data. After that, the information of Gains from Equity, Mutual Fund and Buyback will have to be given in Schedule CG. The shareholders are responsible for paying tax on buyback income. Therefore it is necessary to tell it in CG. It is important to keep in mind that long -term capital gains up to Rs 1.25 lakh in a financial year are exempted from tax from the equity scheme of shares and mutual funds.