Capital Gains-How charged
Capital Gain means a gain or profit on sale of a Capital Asset. Most common
capital assets are House Property, Land, Shares and Mutual Funds. To
taxable as capital gain the gain or profit should be on sale/transfer
of a capital asset.
The two important
points that needs to be understood clearly to find out taxability of
of Capital Assets
important to find out whether the asset sold is a capital asset or not.
Only gain on sale/transfer of a capital asset is taxable as capital
gain. Some assets are not considered as capital asset and the gain on
their sale is exempt from tax. For
example gain on sale of Agricultural Land in rural area is not taxable,
as agricultural land in rural area is not a capital asset.
- Term Capital Asset as defined in Section 2(14) of The
land in rural area, bonds and personal belongings
from being capital assets. So any gain on sale of these assets is not a
capital gain and as gain is not a capital gain there will be no tax on
- Following is a brief discussion on different assets:
- The most
commonly held and known Capital Assets
are House Property, Land, Shares and Mutual Funds.
belongings like Furniture and Vehicles
are not capital assets and there is no tax on profit on sale of these
even though purchased for personal
use is a Capital Asset.
- Gold ETF is
also a Capital Asset.
land in rural area is not a
capital asset and hence profit from sale of such land is not
- The Holding/Owning period of Capital Asset
the asset is a Capital Asset, then the next step towards ascertaining
gain/loss is the period of holding of the asset sold. The period in
months/years till that
asset was our property is called as period of holding of the asset and
plays an important role to find out the taxability of
gain/loss on sale/transfer of such capital asset. So its really
important to keep the date of
purchase/allotment related documents safely for correctly calculating
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