Capital Gain

Madhusudan Kr. Poddar

FCA, Insolvency Professional, DISA, DIRM,
Certification on MSME(IIBF), B. Com
 Capital Gain

How to Compute:-

Equity oriented fund:- Who invest

minimum 65% of its AUM in to domestic
company equity.
STT
Section eligible Assessee condition of Asset sold Asset to be time limit Exemption CGAS* available
eligibility purchased

Purchase - Within 1
Long-Term Capital
Two residential year before or 2 years
Long term Gain invested (No
54 Individual/HUF NA houses can after transfer, yes
Residential HP transfer with in 3
purchased Construction - Within 3
years)
years from transfer

cannot own more than Purchase - Within 1

Sale Proceeds
2 house properties Any Long term One residential year before or 2 years
invested (No
54F Individual/HUF (i.e., existing House Assets other than houses can after transfer, yes
transfer with in 3
property and new residential house purchased Construction - Within 3
years)
house property) years from transfer

Land used for

agricultural purposes Long Term land Long-Term Capital
by the individual / his used for Within 2 years from the Gain invested (No
54B Individual/HUF Agricultural land yes
parent / HUF as the agricultural date of transfer transfer with in 3
case may be for 2 purposes years)
years prior to transfer

Sale Proceeds
NHAI bonds or REC
Any long term Within 6 months from invested (No
54EC ANY ASSESSEE NA bonds, redeemable NO
assets the date of transfer transfer with in 5
after 5 years
years)
Self generated goodwill cost can not be
ascertained. Hence No CG. However self
generated goodwill of business is now taxable
and COA is taken as nil.
Taxation Aspect of ESOP
• In the hand of company:-
• The matter of ESOP expenses is majorly litigative in nature and disallowed in major of the
Judgments.
• There is no specific section which specify about whether it will be allowed as deduction or not.
• The company may claim deduction u/s 37. However revenue may treat as capital expenditure on the
ground that it is just negative security premium.

• In the hand of Employee:-

• At the time of exercise – as a perquisite- the difference between the FMV on exercise date
and exercise price is taxed as perquisite. The employer deducts TDS on this perquisite.
• At the time of sale by employee – as a capital gain- The difference between sale
price and FMV on the exercise date is taxed as capital gains.
• Tax rate:- For listed company ESOP- LTCG Gain< 1Lac- Exempted, LTCG Gain > 1lac Taxed @ 10%
(No indexation), STCG- Taxed @ 15%, For Unlisted company ESOP- LTCG Gain @ 20% with
indexation, 10% without indexation, STCG- Taxed @ Slab Rate%
• Period of holding- Listed >12 Month is long term, Unlisted- >24month is long term
• Indexation benefit- Listed share- No indexation, Unlisted share – Indexation is available- Tax ate
will change if indexation taken/not taken

• Rule 3(8) & 3(9) –Determination of FMV

• Listed –Average of Opening and Closing Prices on Exercise date
• Unlisted -Determined by Category 1 Merchant Banker (registered with SEBI)