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T. Banusekar

IN A case where the long-term capital gains has arisen from sale of shares before October 1, 2004 and where such capital gain is not exempt but is chargeable to tax at 10 per cent computed without the benefit of indexation, will the same be included as part of the gross total income? Will such capital gains be included as part of the income to determine whether surcharge is leviable?

S. K. Gupta

Reply

You are apparently referring to the income of the previous year, 2004-05. In respect of long-term capital gains from sale of shares earned before October 1, 2004, the same will be charged to tax at 20 per cent of the gains computed with the benefit of indexation or at 10 per cent of the gain computed without the benefit of indexation whichever is more beneficial to the assessee. Such capital gains, chargeable to tax, will be a part of gross total income.The same will also be treated as part of the total income and if after including the same, if the total income exceeds Rs 8.50 lakh, surcharge will be leviable.

Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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