INCOME TAX CAPITAL GAIN Meaning CAPITAL GAINS Any

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 Gains There should be a Capital Asset. ØThe capital asset should be transferred by the assessee. ØSuch transfer should take place during the previous year. ØThe profits or gains should arise as a result of this transfer ØSuch profit or gain should not be exempted from tax under sections 54, 54 B, 54 D, 54 EC, 54 F and 54 G & 54 GA.

DEFINATION OF CAPITAL ASSETS 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)] ØAny 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 Sec 53 A of the transfer of property act, 1982 ØAny 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 �Exchange �Relinquishment �Extinguishment �Compulsory Acquisition �Conversion of Capital Asset Into Stock in Trade[sec(47)(iv)]

TYPES OF CAPITAL GAIN ØSHORT-TERM CAPITAL GAIN. ØLONG-TERM CAPITAL GAIN.

SHORT-TERM CAPITAL GAIN Any Gain on transfer of short-term capital asset is called Short-term capital 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 q. Full value of consideration received or accruing. q. Less : -Expenditure incurred wholly and exclusively in connection with such transfer. -Cost of acquisition. -Cost of improvement. q. Gross short term capital Gain.

LONG-TERM CAPITAL GAIN Any Gain on transfer of long-term capital asset is called Long-term capital Gain on asset held by assessee for a period exceeding 36 months (for shares of 12 months).

Computation of LTCG-Section-48 �Full 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 v [Section 10(36)]: Income from sale of shares in certain cases. v [Section 10(37)]: Any Income from long -term capital asset being self-cultivated urban agriculture land on compulsory acquisition.

v [Section 10(38)]: Long-term capital Gain on transfer of Securities covered under securities Transaction Tax. v [Section 10(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 v [Section-54]: Sale of residential House Property(asset in long-term). v [Section-54 B]: Sale of Self-cultivated agricultural land(Urban). v [Section-54 D]: Compulsory acquisition of capital assets.

v[Section-54 EC]: Sale of any long term capital asset. v[Section-54 F]: Sale of any long term assets. v[Section-54 G]: Transfer of assets due to shifting of factory from urban to non-urban areas.

v[Section-54 GA]: Transfer of assets of an Industrial undertaking shifting from an urban area to a special Economic Zone. v[Section-54 GB]: Long term capital gain on transfer of residential property, if net consideration is invested in the Equity shares of an eligible company. v[Section-54 H]: Gain on compulsory acquisition.