Tax on long-term capital gains

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, subject to sub-sections (2) and (3), shall be the aggregate of— (a) income-tax payable on the total income as reduced by such long-term capital gains, had the total income, as so reduced, been his total income; and (b) income-tax calculated on such long-term capital gains at the rate of 12.5%.

In the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by long-term capital gains computed under sub-section (1) is below the maximum amount which is not chargeable to income- tax, then,— (a) 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 (b) the tax on the balance of such long-term capital gains shall be computed at the rate as referred in sub-section (1).

In the case of an individual or a Hindu undivided family, being a resident, in the case of transfer of a long-term capital asset, being land or building, or both, which is acquired before the 23rd July, 2024, the excess income-tax computed as per the following formula shall be ignored:–– E = A – B where–– E = excess income-tax to be ignored; A = income-tax computed under clause (b) of sub-section (1); B = income-tax computed under clause (b) of sub-section (1) taking the rate as 20% and the capital gains is computed by taking the cost of acquisition as indexed cost of acquisition and the cost of improvement as indexed cost of improvement.