Clarification regarding computation of tax in respect of long-term capital gains under section 112 of the Income-tax Act, 1961

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....as inserted in the Income-tax Act by the Finance Act, 1992, with effect from April 1, 1993. It provides that where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income shall be the aggregate of, _ (i) the amount of income-tax payable on ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... income from long-term capital gains. It is also interpreted that even if the facility of set off of loss under any other head is allowed with the long-term capital gains, the flat rate of tax will be applicable to the whole of the long-term capital gains. That means while the whole of long-term capital gains will be subject to tax, the amount of loss which has been set off in terms of section 71(....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....head as part of the gross total income or total income. Only that amount of long-term capital gains which is included in the total income would be subject to tax at a prescribed flat rate. Thus, if there was a loss of Rs.  10,000 from business and there is long-term capital gains of Rs. 30,000, then after setting off of the loss of Rs. 10,000 with long-term capital gains, only Rs. 20,000 woul....