CS Executive · Tax Laws and Practice · Capital Gains
Under the Income-tax Act, 2025 (applicable from the June 2027 session), long-term capital gains on transfer of a long-term capital asset that is not covered by the special equity provisions are taxed under section 197 at which flat rate?
Long-term capital gains under section 197 of the Income-tax Act, 2025 are taxed at a flat 12.5%. The 20% rate is used only as a notional comparison for pre-23 July 2024 land or building, not as the general rate.
- A10%
- B12.5%Correct
- C20%
- D30%
Explanation
Section 197(1)(b) provides that income-tax on long-term capital gains is calculated at 12.5%. The 20% rate appears only in sub-section (3) as a notional comparison for land or building acquired before 23 July 2024, and is not the general rate. 10% is the older rate and no longer applies.
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