Clause 197 - Tax on long-term capital gains.

Long-term capital gains taxation: two-part computation with concessional rate and targeted relief for certain property transfers.

Taxation of long-term capital gains uses a two-part computation: tax on total income excluding long-term capital gains plus tax on long-term capital gains at a concessional rate of 12.5%. For resident individuals and HUFs, any shortfall of non capital income below the basic exemption is applied against long-term gains before that concessional rate. A transitional relief for pre-existing land or building acquisitions limits excess tax by comparing concessional tax with tax computed using indexation and a higher rate. Gross total income for Chapter VIII deductions excludes long-term capital gains.