INCOME TAX

CAPITAL GAIN

Meaning CAPITAL GAINS

“Any profit or gains arising from the transfer of capital assets is taxable under the head capital gains in the previous year in which the transfer has taken place.”

Conditions for Gains to be charged under Capital GainsThere should be a Capital Asset.The capital asset should be transferred by

the assessee.Such transfer should take place during the

previous year.The profits or gains should arise as a result

of this transferSuch profit or gain should not be exempted

from tax under sections 54, 54B, 54D, 54EC, 54F and 54G & 54GA.

DEFINATION OF CAPITALASSETS

Capital asset is defined to include

property of any kind, whether

fixed or circulating, movable or

immovable, tangible or intangible.

TRANSFER of CAPITAL ASSETS[Sec-2(47)]Any transaction involving the allowing of the

possession of any movable property to be taken or retained in part of performance of contract of the nature referred to in the Sec53A of the transfer of property act,1982

Any transaction (whether by way of becoming a member of, or acquiring shares in a co-operative society, company association of person or by way of agreement or any arrangement or in any other

manner whatsoever) which has the

effect of transferring or enabling the

enjoyment of any immovable

property.

WHAT IS INCLUDED IN TRANSFER

Sale ExchangeRelinquishmentExtinguishmentCompulsory AcquisitionConversion of Capital Asset Into Stock in

Trade[sec(47)(iv)]

TYPES OF CAPITAL GAIN

SHORT-TERM CAPITAL GAIN.

LONG-TERM CAPITAL GAIN.

SHORT-TERM CAPITAL GAIN

Any Gain on transfer of short-term capital

asset is called Short-term capital Gain.Gain on asset held by assesse for a period

up to 36 months (in case of shares debentures units securities etc. this period is of 12 months).

Computation of STCG-Section-48

Full value of consideration received or accruing.

Less : -Expenditure incurred wholly and

exclusively in connection with such transfer. -Cost of acquisition.

-Cost of improvement.Gross short term capital Gain.

LONG-TERM CAPITAL GAIN

Any Gain on transfer of long-term capital

asset is called Long-term capital Gain.Gain on asset held by assessee for a period

exceeding 36 months (for shares of 12 months).

Computation of LTCG-Section-48Full value of consideration received or

accruing Less :

Expenditure incurred wholly and exclusively

in connection with such transfer. Indexed cost of acquisition. Indexed cost of improvement.

Gross Long Term Capital Gain

CAPITAL GAIN EXEMPTED u/s-10

[Section10(36)]: Income from sale of shares in certain cases.

[Section10(37)]: Any Income from long-term capital asset being self-cultivated urban agriculture land on compulsory acquisition.

[Section10(38)]: Long-term capital Gain on transfer of Securities covered under securities Transaction Tax.

[Section10(40)]: Income from transfer of asset of an undertaking engaged in the business of generation, transmission or distribution of power.

CAPITAL GAIN EXEMPTED u/s-54

[Section-54]: Sale of residential House Property(asset in long-term).

[Section-54B]: Sale of Self-cultivated agricultural land(Urban).

[Section-54D]: Compulsory acquisition of capital assets.

[Section-54EC]: Sale of any long term capital asset.

[Section-54F]: Sale of any long term assets.

[Section-54G]: Transfer of assets due to shifting of factory from urban to non-urban areas.

[Section-54GA]:Transfer of assets of an Industrial undertaking shifting from an urban area to a special Economic Zone.

[Section-54GB]: Long term capital gain on transfer of residential property, if net consideration is invested in the Equity shares of an eligible company.

[Section-54H]: Gain on compulsory acquisition.