What is Grandfathering Concept in Long term Capital Gains Tax || Explained

What is Grandfathering Concept in Long term Capital Gains Tax || Explained




Scope of Section 112A of the Income Tax Act, 1961:

Section 112A provides for long term capital gains on the sale of listed equity shares, equity-oriented mutual funds, and the units of a business trust. The said section was introduced in Budget 2018 after the removal of exemption under section 10(38). It is applicable from the financial year 2018-19. It provides for taxation of long-term capital gains on listed securities at 10% for gains exceeding the threshold limit of Rs. 1 lakh. The income tax form contains the schedule for 112A which requires the taxpayer to fill the scripwise details of securities sold during the year.
Till the financial year 2017-18, long-term capital gains arising on the sale of equity shares and equity-linked units of mutual funds stood exempted under section 10(38) of the income tax act. This had changed with the introduction of grandfathering clauses in budget 2018 which allowed the gains to be exempted till 31st January 2018. The cost of acquisition of such securities had to be calculated as per the specified formula.

In the case of securities bought before 1st February 2018, the cost of acquisition in such a case was calculated as below:

Step 1: Consider the lower of the fair market value and the sale consideration.

Step 2: Consider the higher value calculated as per step 1 and the purchase price Equipment ....... which i use
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MIC
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Tripod (use sometime for mobile )
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Tablet
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***************************************** Equipment ....... which i use
*********************************
MIC
https://amzn.to/3wCmHOs
*****************************************
Tripod (use sometime for mobile )
https://amzn.to/3c0Jbkm
*****************************************
Tablet
https://amzn.to/3upiUmh
*****************************************