Know about Grandfathering clause for shares and equity mutual funds
Since 1st April 2018, long-term capital gains (LTCG) made on the redemption of sharee and equity mutual funds have been subject to 10% tax.
The tax is applicable on LTCG made by the investor over and above Rs 1 lakh a year.
However, the LTCG made till 31 January 2018, have been grandfathered, so the gains will remain tax-exempt.
In case of shares & units purchased before 1 February 2018, cost of acquisition will be considered as the higher of the actual cost of acquisition, or the NAV as on 31 January 2018.
However, If the sale consideration (NAV for redemption) is lower than the NAV on 31 January 2018, the sale consideration will be considered instead of NAV.
It will be relevant for all the computatin of capital gain of shares and equity mutual fund.