An assesses is required by Section 111A to file a tax under the Income Tax Act, 1961, at the rate of fifteen percent on the capital gained on short-term capital assets as specified by Section 2 (42A). This section includes listed equity shares, listed mutual funds, and listed business trust units that are subject to the Securities Transaction Tax.
Section 111A Does Not Give the Deductions Under Section VI-A.
1. Ability to Multitask
Because you are utilizing both hands simultaneously when playing the piano, playing it can help you become more adept at multitasking. Your ability to multitask can help you be more productive at work or in the classroom by improving your speed and time management.
2. Enhances Self-Control and Patience
Learning to read music notes and play the piano requires patience and dedication. To fully grasp an instrument, it typically takes months or years. especially when you’re composing a new melody on the piano. A significant deal of experimenting is needed to create a distinctive composition that will excite the audience.
3. It Delivers the Message Well and Captures the Emotions
A flat rate of 15% will be applied to the STCG if your total income plus the STCG exceeds Rs 2.5 lakhs. However, if the total income was less than Rs 5 lakhs, a reimbursement of up to Rs 12500 of the tax bill would be possible under the current income tax system.
The Income Tax Act’s Section 112A
Long-term capital assets include business trust units subject to Securities Transaction Tax (STT), units of an equity-oriented fund, and equity interests in corporations. If the gains reach INR 1,00,000, the assesses are required to pay a 10% capital gain tax under Section 112A. This clause applies to any document that names STT as an equity-oriented fund unit or a business trust unit. Under Section 112A, there are no deductions allowed under Chapter VI-A (like section 80C, 80D etc.) of Income Tax Act 1961. There is no exemption available if any of the conditions stated in Section 10(38) are not fulfilled. The first and second provisos of Section 48 do not apply.
Section 112A Exemptions
Purchase Price (Capital Gains on or before January 31, 2018)
The acquisition expenses’ tax computation must take into account values that are higher than the real cost of acquisition and lower than the asset’s financial market value and sales consideration. Gains beyond INR 1,00,000 are subject to 10% tax; gains below that amount are free from tax.
On gains above Rs 1 lac, an adjustment for the Rs 1,00,000 Exemption LTCG under section 112A with 10% would be computed.
According to CBDT, the sum of Rs 1 lac would not be subtracted from the total amount of capital gains because it would be automatically subtracted by the tax software in the FAQ area.
The Income Tax Act’s section 112A specifies the following benefits conditions:
The following conditions must be satisfied in order to take advantage of the lower rate under section 112A of the Income Tax Act.
- When an asset was sold for units in a business trust or equity-oriented fund, or when ownership of the company’s stock was acquired and transferred, the Securities Transaction Tax (STT) was paid.
- To qualify for the deduction under Chapter VI A, which does not apply to these capital gains, long-term capital assets have to be securities. It is not possible to use the section 87A refund to lower the long-term capital gains tax under section 112A.
Difference between Section 111A and Section 112A of Income tax Act
| Aspect | Section 111A | Section 112A |
| Type of Gain Applicable | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) |
| Tax Rate | 15% | 10% |
| Exemption Limit | No tax if total income (including STCG) is below ₹2.5 lakh | ₹1 lakh exemption limit; 10% tax on gains above ₹1 lakh |
| Offsetting Losses | No provision to offset short-term capital losses | Long-term capital losses can be carried forward for 8 years |
| Carry Forward of Losses | Not applicable | Applicable for 8 years from the assessment year where the loss was incurred |
Conclusion
For online filing ITR & effective tax planning in India requires a grasp of capital gains under Sections 111A, 112, and 112A of the Income Tax Act. Long-term capital gains on non-equity assets are covered by Section 112, where they are typically subject to an index-based 20% tax. Long-term capital gains on stock investments are covered by Section 112A, which offers a favorable rate of 10% above the ₹1 lakh exemption. Understanding these clauses enables investors to minimize their tax obligations while adhering to the law and making well-informed decisions.
If you have any query regarding tax treatment u/s 111A or 112A etc, you may discuss with our KcorpTax ITR filing experts.
FAQs on Capital Gain u/s 111A and 112A
1. Does a person whose total income is less than 2.5 lakh have to pay capital gains tax?
You are exempt from paying taxes if you are a resident Indian and your only source of income is the ones listed below. LTCG, you are granted a one-level exemption. Gains might be adjusted in relation to the 2.5 lack basic exemption limit.
2. What is the capital gains tax rate under section 112A?
Above the Rs 1 lakh exemption threshold, the tax rate is 10%. This indicates that up to Rs 1 lakh each financial year, long-term capital gains covered by section 112A are not taxable. Gains over Rs 1 lakh are liable to applicable surcharges, 10% tax, and an education cess.
3. What advantages does 112A offer?
Equity shares, units in business trusts subject to STT, or units in equity-oriented mutual funds must be included in the assets in order to qualify for Section 112A benefits. The gains must also be long-term (kept for more than 12 months) and exceed the Rs. 1 lakh exemption limit.
4. What distinguishes income tax forms 112 and 112A?
Gains above ₹1 lakh are subject to 10% non-indexation tax under Section 112A, which also applies to LTCG from equities transactions. The LTCG from non-equity assets is covered in Section 112, where it is taxed at 20% with indexation benefits.
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