Planning to book profits after the mouth-watering rally at Dalal Street? There is a high probability that you will have to pay long-term capital gain (LTCG) tax. Made applicable in 2018-19, LTCG is to be paid on gains made, on equity share sale, after a holding period of 12 months or more. Those earning in access of Rs 100,000 in a fiscal year have to pay 10 per cent LTCG tax. The government has set January 31, 2018 as the grandfathering date for computing LTCG. In other words, the gain will be the difference between current market price and January 31, 2018 price. Nearly 90 per cent Nifty stocks are currently trading above their grandfathering price. T
The six stocks that are currently below their January 31, 2018 price are Hero Motocorp, Mahindra & Mahindra, Hindustan Unilever, Vedanta, Wipro and Britannia. These companies, however, are less than 6 per cent away from their January 31, 2018 level. Nifty stocks that have gained most since then are Yes Bank, Indiabulls Housing, Bajaj Finserv and Bajaj Finance—all financial stocks.
Nearly 80 per cent of stocks in the BSE 100, BSE 200 and BSE500 universe too are currently above their January 31, 2018 levels. The likelihood of LTCG applicability outside the BSE500 universe is much less. Less than half of the 3,400-odd companies traded on the BSE are currently above their grandfathering price.
The number if still better compared to the first half of fiscal 2018-19. As on September 2018, only 15 per cent of the stocks were above their January 31 closing price. The benchmark indices had come off by nearly 15 per cent from their all-time highs on August 2018 during September and October. The correction in the broader market was stepper with both mid- and small-cap indices slipping into bear market territory. The latest rally in the market has lifted the market back to its all-time highs. The broader markets too have rallied but have still a lot of catching up to do to scale new peaks.