Section 112A - Tax on long-term capital gains in certain cases - Income-tax Act, 1961

9 [Tax on long-term capital gains in certain cases 112A. (1) Notwithstanding anything contained in section 112, the tax payable by an assessee on his total income shall be determined in accordance with the provisions of sub-section (2), if- (i) the total income includes any income chargeable under the head Capital gains ; (ii) the capital gains arise from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust; (iii) securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004 (23 of 2004) has,- (a) in a case where the long-term capital asset is in the nature of an equity share in a company, been paid on acquisition and transfer of such capital asset; or (b) in a case where the long-term capital asset is in the nature of a unit of an equity oriented fund or a unit of a business trust, been paid on transfer of such capital asset. (2) The tax payable by the assessee on the total income referred to in sub-section (1) shall be the aggregate of- 12 [ (i) the amount of income-tax calculated on such long-term capital gains exceeding one lakh twenty-five thousand rupees (a) on long-term capital gains at the rate of ten per cent. for any transfer which takes place before the 23rd day of July, 2024; and (b) on long-term capital gains, at the rate of twelve and one-half per cent. for any transfer which takes place on or after the 23rd day of July, 2024: Provided that the limit of one lakh twenty-five thousand rupees shall apply on aggregate of the long-term capital gains under sub-clauses (a) and (b); ] (ii) the amount of income-tax payable on the total income as reduced by the amount of long-term capital gains referred to in sub-section (1) as if the total income so reduced were the total income of the assessee: Provided that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, the long-term capital gains, for the purposes of clause (i), shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax. (3) The condition specified in clause (iii) of sub-section (1) shall not apply to a transfer undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transfer is received or receivable in foreign currency. (4) The Central Government may, by notification in the Official Gazette, specify the nature of acquisition in respect of which the provisions of sub-clause (a) of clause (iii) of sub-section (1) shall not apply. (5) Where the gross total income of an assessee includes any long-term capital gains referred to in sub-section (1), the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. (6) Where the total income of an assessee includes any long-term capital gains referred to in sub-section (1), the rebate under section 87A shall be allowed from the income-tax on the total income as reduced by tax payable on such capital gains. Explanation .-For the purposes of this section,- (a) equity oriented fund means a fund set up under a scheme of a mutual fund specified under clause (23D) of section 10 10 [ or under a scheme of an insurance company comprising unit linked insurance policies to which exemption under clause (10D) of the said section does not apply on account of the applicability of the fourth and fifth proviso thereof ] and,- (i) in a case where the fund invests in the units of another fund which is traded on a recognised stock exchange,- (A) a minimum of ninety per cent. of the total proceeds of such fund is invested in the units of such other fund; and (B) such other fund also invests a minimum of ninety per cent. of its total proceeds in the equity shares of domestic companies listed on a recognised stock exchange; and (ii) in any other case, a minimum of sixty-five per cent. of the total proceeds of such fund is invested in the equity shares of domestic companies listed on a recognised stock exchange: Provided that the percentage of equity shareholding or unit held in respect of the fund, as the case may be, shall be computed with reference to the annual average of the monthly averages of the opening and closing figures; 11 [Provided further that in case of a scheme of an insurance company comprising unit linked insurance policies to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth provisos thereof, the minimum requirement of ninety per cent. or sixty-five per cent., as the case may be, is required to be satisfied throughout the term of such insurance policy. ] (b) International Financial Services Centre shall have the meaning assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (c) recognised stock exchange shall have the meaning assigned to it in clause (ii) of Explanation 1 to clause (5) of section 43. ] ********* Notes 1 Inserted vide Finance (No. 2) Act, 1965. 2. The figure 1 was inserted vide Finance Act, 1966, w.e.f. 1-4-1966. 3 Inserted vide Finance Act, 1966, w.e.f 1-4-1966. 4. Omitted vide Finance Act 20 of 1967 w.e.f. 1-4-1968 before it was read as plus 5. Omitted vide Finance (No. 2) Act, 1967 w.e.f. 1-4-1968 before it was read as (c) income-tax on such compensation or other payment and on such capital gains, if any, computed in accordance with the provisions of clause (iii) of section 112 and of clause (b) of section 114, respectively. 6 Substituted vide Finance Act 20 of 1967 w.e.f. 1-4-1968. before it was read as sections 112, 114 and 193 7. Omitted vide Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1969 before it was read as Explanation 2 [1]--For the purposes of clause (b), the average rate of income-tax shall be calculated as if the total income as reduced in the manner specified in the said clause consisted wholly of earned income as defined in the Finance Act of the relevant year.] 8. Omitted vide Finance Act, 1988, w.e.f. 1-4-1989 before it was read as 1 [Tax on interest on National Savings Certificates (First Issue) 112A. Where the total income of an assessee, not being a company, includes any interest on National Savings Certificates (First Issue), the tax payable by him on his total income shall be- (a) the amount of income-tax payable on the total income as reduced by the amount of such inclusion and by the amount of compensation or other payment referred to in clause (ii) of section 28 and of the capital gains, if any, had the total income so reduced been his total income; plus; (b) the amount of income-tax calculated on the amount of such interest included in the total income at the average rate of income-tax which would have been applicable to the total income if the amount of such interest and the amount of compensation or other payment and of the capital gains aforesaid, if any, had not formed part of it; 4 [***] (c) 5 [******] 7 [******] ] 3 [ Explanation 2.-For the purposes of this section and 6 [Section 193] National Savings Certificates (First Issue) includes National Savings Certificates (First Issue)-Bank Series .] 9. Inserted vide THE FINANCE ACT, 2018, w.e.f. 1st day of April, 2019 10. Inserted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 11. Inserted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 12. Substituted vide Section 31 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 23-07-2024 before it was read as, (i) the amount of income-tax calculated on such long-term capital gains exceeding one lakh rupees at the rate of ten per cent.; and