Only A Fifth Of Stocks Will Attract Long-Term Capital Gains Tax

Selling shares of only a fifth of Indian companies in the broader market will attract the long-term capital gains tax introduced last year as the majority of scrips are trading below the cut-off price.

In the last budget, Finance Minister Arun Jaitley announced a 10 percent tax on gains exceeding Rs 1 lakh on shares sold after a holding period of one year. The gains will be calculated from the high of Jan. 31 last year.

Of the 501 stocks in the Nifty 500 Index, 94 are trading above their price on Jan. 31, 2018. Investors holding these shares will have to pay the levy on the gains above Rs 1 lakh.

More than 80 percent of the stocks are trading below the cut-off price as India’s stock market swung between gains and losses in the last 12 months. The introduction of long-term capital gains tax on equities, a global trade war, rising fuel prices, a change in mutual fund classification and a credit crisis for non-bank lenders weighed on the sentiment.

Among the stocks that gained the most during the period are Merck Ltd., V-Mart Retail Ltd., Vinati Organics Ltd., Bata India Ltd. and Bajaj Finance Ltd.

Among the stocks that have lost the most since Jan. 31, 2018 are IL&FS Transportation Ltd., Vakrangee Ltd., PC Jeweller Ltd., 8K Miles Software Services Ltd. and Manpasand Beverages Ltd.

(The copy was updated as per Thursday’s closing values.)