Hi, I have sold some ESPP ( employee stock purchase plan ) shares of my company ( listed in NASDAQ) . It is coming to me as long term capital gain as I sold it an year after my purchase. What is the tax liability on this profit ? Can I reinvest them somewhere else in order to save tax ? I have heard that this profit can be reinvested on buying house , loan repayment , investing in long term govt bonds ( NHAI etc.) . Any help will be highly appreciated.
1 Answers
Long term capital gains only applies if investment has been kept for atleast three years. If same has been sold before that, whole gains will be added to income and will be taxed as per tax slab rates.
In case of all LTCG (Long term capital gains) arising from other than selling residential properties, section 54F and 54EC is available for tax saving.
Under section 54F, you can reinvest the sale amount into a residential property (between one year before selling and two years after selling) or construct a new house within 3 years of sale. But one cannot hold more than one residential property at the time of buying new property. Plus there should also not be any further property purchase for next three years.
Under section 54EC, you may invest the capital gains into capital gains bonds within 6 months of sale issued by Rural Electrification Corporation, National Highways Authority of India and National Bank of Agricultural and Rural Development. But there is a max limit of investing 50 lakhs in a financial year into these bonds.
Isnt the duration 1 year for stocks and 3 years for other kind of capitals?
That only applies for stock in Indian markets, on which STT is paid on transactions.
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