Section 112 - Tax on long-term capital gains - Income-tax Act, 1961

1 [Tax on long-term capital gains. 112. (1) 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,- 22 [ (a) in the case of an individual or a Hindu undivided family, being a resident, (i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income; and (ii) the amount of income-tax calculated on such long-term capital gains, (A) at the rate of twenty per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) 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 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, such long-term capital gains 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 and the tax on the balance of such long-term capital gains shall be computed at the rate as applicable in sub-clause (ii): Provided further that in the case of transfer of a long-term capital asset, being land or building or both, which is acquired before the 23rd day of July, 2024, where the income-tax computed under item (B) exceeds the income-tax computed in accordance with the provisions of this Act, as they stood immediately before their amendment by the Finance (No. 2) Act, 2024, such excess shall be ignored; (b) in the case of a domestic company, (i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income; and (ii) the amount of income-tax calculated on such long-term capital gains, (A) at the rate of twenty per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) 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; (c) in the case of a non-resident (not being a company) or a foreign company, (i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income; and (ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)], (A) at the rate of twenty per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) 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; and (iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities or shares of a company not being a company in which the public are substantially interested, as computed without giving effect to the first and second provisos to section 48, calculated on such long-term capital gains, (A) at the rate of ten per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) 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; (d) in any other case of a resident, (i) the amount of income-tax payable on the total income as reduced by the amount of long-term capital gains, had the total income as so reduced been its total income; and (ii) the amount of income-tax calculated on such long-term capital gains, (A) at the rate of twenty per cent. for any transfer which takes place before the 23rd day of July, 2024; and (B) 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 where the tax payable in respect of any income arising from the transfer of a long-term capital asset which takes place before the 23 rd day of July, 2024, being listed securities (other than a unit) or zero coupon bond, exceeds ten per cent. of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee: ] 18 [Provided further that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being a unit of a Mutual Fund specified under clause (23D) of section 10, during the period beginning on the 1st day of April, 2014 and ending on the 10th day of July, 2014, exceeds ten per cent. of the amount of capital gains, before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee. ] 14 [ Explanation.- For the purposes of this sub-section,- 16 [ ( a ) the expression securities shall have the meaning assigned to it in clause ( h ) of section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); ( aa ) listed securities means the securities which are listed on any recognised stock exchange in India ; ( ab ) unlisted securities means securities other than listed securities; ] ( b ) 19 [ **** ] (2) Where the gross total income of an assessee includes any income arising from the transfer of a long-term capital asset, the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee. (3) 21 [ **** ] ***************** NOTES:- 1. Inserted vide Section 53 of the Finance Act, 1992 w.e.f. 01-04-1993 Earlier , Amended vide Section 34 of the Finance Act, 1965 w.e.f. 01-04-1965 And was Amended vide Section 10 of the Finance (No. 2) Act, 1965 w.e.f. 11-09-1965 And was Omitted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, Tax on compensation 112. Where the total income of an assessee, not being a company, includes any compensation or other payment which is chargeable as the profits and gains of business or profession in accordance with the provisions of clause (ii) of section 28, the tax payable by him on his total income shall be (i) the tax payable on the total income as reduced by the amount of such compensation or other payment and by the amount of the interest on National Savings Certificates (First Issue) and of the capital gains, if any; (ii) **** (iii) the tax on such compensation or other payment equal to the amount which bears to the tax which would have been payable on the total income as reduced by the amount of the interest on National Savings Certificates (First Issue) and of the capital gains, if any, and two-thirds of the amount of such inclusion, the same proportion as the whole amount of such compensation or other payment bears to such reduced total income; and (iv) the tax on the interest on National Savings Certificates (First Issue) and on capital gains, if any, computed in accordance with the provisions of clause (b) of section 112A and clause (b) of section 114, respectively. 2. Inserted vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 3. Inserted vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 4. Substituted vide Section 37 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1997 before it was read as, thirty Earlier , Substituted vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, forty 5. Omitted vide Section 23 of the Finance Act, 1995 w.e.f. 01-04-1996 before it was read as, Provided that in relation to long-term capital gains arising to a venture capital company from the transfer of equity shares of venture capital undertakings, the provisions of sub-clause (ii) shall have effect as if for the words thirty per cent , the words twenty per cent had been substituted; 6. Inserted vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 7. Re-lettered vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 before it was read as, (c) 8. Inserted vide Section 31 of the Finance Act, 1994 w.e.f. 01-04-1995 9. Substituted vide Section 37 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1997 before it was read as, thirty 10. Omitted vide Section 23 of the Finance Act, 1995 w.e.f. 01-04-1996 before it was read as, Explanation.-For the purposes of this sub-section,- (a) venture capital company means such company as is engaged in providing finance to venture capital undertakings mainly by way of acquiring equity shares of such undertakings or, if the circumstances so require, by way of advancing loans to such undertakings, and is approved by the Central Government in this behalf ; (b) venture capital undertaking means such company as the prescribed authority may, having regard to the following factors, approve for the purposes of this sub-section, namely :- (1) the total investment in the company does not exceed ten crore rupees or such other higher amount as may be prescribed ; (2) the company does not have adequate financial resources to undertake projects for which it is otherwise professionally or technically equipped ; and (3) the company seeks to employ any technology which will result in significant improvement over the existing technology in India in any field and the investment in such technology involves high risk. 11. Inserted vide Section 57 of the Finance Act, 1999 w.e.f. 01-04-2000 12. Inserted vide Section 49 of the Finance Act, 2000 w.e.f. 01-04-2000 13. Inserted vide Section 33 of the Finance Act, 2005 w.e.f. 01-04-2006 14. Substituted vide Section 49 of the Finance Act, 2000 w.e.f. 01-04-2000 before it was read as, Explanation .-For the purposes of this sub-section, listed securities means the securities- (a) as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); and (b) listed in any recognised stock exchange in India. 15. Substituted vide Section 43 of the Finance Act, 2012 w.e.f. 01-04-2013 before it was read as, ( ii ) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent ; 16. Substituted vide Section 43 of the Finance Act, 2012 w.e.f. 01-04-2013 before it was read as, (a) listed securities means the securities- ( i ) as defined in clause ( h ) of section 2 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); and ( ii ) listed in any recognised stock exchange in India; 17. Substituted vide Section 35 of the Finance (No. 2) Act 2014 w.e.f. 01-04-2015 before it was read as, being listed securities 12 [ or unit ] 18. Inserted vide Section 35 of the Finance (No. 2) Act 2014 w.e.f. 01-04-2015 19. Omitted vide Section 35 of the Finance (No. 2) Act 2014 w.e.f. 01-04-2015 before it was read as, ( b ) unit shall have the meaning assigned to it in clause ( b ) of Explanation to section 115AB. ]] 20. Substituted vide Section 50 of the Finance Act 2016 w.e.f. 01-04-2013 before it was read as, unlisted securities 21. Omitted vide Section 50 of the Finance Act 2023 w.e.f. 01-04-2023 before it was read as, (3) Where the total income of an assessee includes any income arising from the transfer of a long-term capital asset, the total income shall be reduced by the amount of such income and the rebate under section 88 shall be allowed from the income-tax on the total income as so reduced. 22. Substituted vide Section 30 of the Finance (No. 2) Act, 2024 w.e.f. 23-07-2024 before it was read as, ( a ) in the case of an individual or a Hindu undivided family, 2 [ being a resident, ] - ( i ) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income; and ( ii ) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent : Provided that 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, such long-term capital gains 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 and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent ; ( b ) in the case of a 3 [ domestic ] company,- ( i ) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and ( ii ) the amount of income-tax calculated on such long-term capital gains at the rate of 4 [ twenty ] per cent : 5 [ **** ] 6 [ ( c ) in the case of a non-resident (not being a company) or a foreign company,- ( i ) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and 15 [ ( ii ) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause ( iii )] at the rate of twenty per cent; and ( iii ) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being 20 [ unlisted securities or shares of a company not being a company in which the public are substantially interested ] , calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48. ] 7 [ ( d ) ] in any other case 8 [ of a resident ] ,- ( i ) the amount of income-tax payable on the total income as reduced by the amount of long-term capital gains, had the total income as so reduced been its total income ; and ( ii ) the amount of income-tax calculated on such long-term capital gains at the rate of 9 [ twenty ] per cent. Explanation. - 10 [ **** ] 11 [Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, 17 [ being listed securities (other than a unit) ] 13 [ or zero coupon bond ], exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee.