No Long term capital gain LTCG if you sell stocks of 420 out of BSE 500 companies

The imposition of LTCG (Long Term Capital Gains) tax on stocks and equity-oriented mutual funds have frightened many investors as on the day when Finance Minister Arun Jaitley announced it, the BSE Sensex crashed nearly 500 points.

With regard to the present stock market situation, the benchmark Sensex has fallen about 13 per cent from the highs attained in late-August. The sharp correction in most of the equity shares from blue-chips to small-caps has washed off the gains attained in first eight months of 2018.

The steep fall in the market has wiped out the gains made in the past eight months. The silver lining (if you can call it that) is that investors in 420 shares will not have to pay any LTCG if they sell now. These scrips are trading below their 31 January cut-off date for calculating the tax.

Of the BSE 500 stocks, 366 closed on Thursday more than 10% below their 31 January price. Another 23 were 5-10% down and 31 were up to 5% in the red. If investors sell these shares now, they can book losses that can be adjusted against other capital gains or carried forward for up to eight financial years.


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