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TMI BlogClarification regarding computation of tax in respect of long-term capital gains under section 112 of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the total income as reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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(2) will not be allowed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would remain under the head "Capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustration 2 (for an individual) Profits and gains of business(_)1,00,000 Long-term capital gains90,000 Total incomeNil Business loss c/f10,000 Computation of tax on long-term capital gains : There would be no income under the head "Capital gains" after business loss has been set off with long-term capital gains. Hence, there would be no tax in this case. (Sd.) Dr. Prabodh Seth, Un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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