Excel Based Mutual Funds Calculator

August 3, 2021 By Damodhar C Off

 How to Calculate Tax on Shares and Mutual Funds Easily

To give impetus to the equity markets, the government has given various concessions to this sector. Under Section 10(38) of the Income Tax Act, exemption has been provided for long-term capital gains arising from the sale of equity shares in a company or a unit of an equity oriented fund.

An equity oriented fund is one where the investible fund is invested by way of equity shares in domestic companies to the extent of more than 65% of the total income of such fund and is set up under a scheme of a mutual fund specified under clause . (23D). However, capital gains arising from long-term capital assets on transfer of listed securities with effect from assessment year (2019-20) shall be taxed at the rate of 10% of tax to the extent of Rs.100000/- but on the satisfaction of the following conditions:-

1. In case of equity shares, securities transaction tax has been paid on both acquisition and transfer and

2. In a case where the long-term capital asset is in the nature of a unit of an equity oriented fund, securities transaction tax has been paid on transfer.

Equity Markets Dalal Street

However, long-term capital gains shall be computed in respect of cost of acquisition and cost of improvement, if any, without bearing the inflation index and the benefit of computing capital gains in foreign currency in case of non-resident shall also not be allowed. . .

Benefits of Grandfathering

Investments made on or before the 31st day of January, 2018 are Grand Fathers, the cost of acquisition in respect of such investments made up to 31st January, 2018 shall be deemed to be the higher of:-

1. the actual cost of acquisition of such investments and

2. Bottom of

(i) FMV of such asset

(ii) the highest value of FVC earned on account of FMV received or transferred on the recognized stock exchange as on 31st January, 2018.


Now as the time for filing of tax returns is approaching, it will be necessary that the calculation be done as per the latest norms laid down by the government, according to which equity shares and equity oriented funds have become taxable above the limit. Are you calculating capital gains from equity correctly?

The author is a Chartered Accountant and can be contacted at sandeep@kcccas.com. Any comments or questions are welcome.

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