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Capital Gains Notes
Capital Gains Notes
Capital Gains Notes
(Sec. 45 to 54)
Sec. 45(1): Basis of Charge:
Any profit or gain arising from transfer of capital asset shall be charged to tax under the
head capital gain in the same previous year in which transfer took place.
[Capital Asset +Transfer =Capital Gain/ Loss (Accrual basis)]
Sec. 2(14) : Capital Asset :
Capital asset means : a) Any kind of property held by an assessee, whether or not
connected with business or profession of the assessee. b) Any securities held by a FII which has
invested in such securities in accordance with the regulations made under the SEBI Act, 1992.
Capital Asset
Jewellery :
a) Ornaments made of gold, silver, platinum or any other precious metal, whether or not worked
or sewn into any wearing apparel.
b) Precious or semi precious stones, whether or not set in any furniture, utensil (home
appliances) or other article or worked or sewn into any wearing apparel.
Agricultural Land :
The land in India, which is not situated within the limits of municipality or cantonment
board:
Population of the municipality or Distance fromthe limits
cantonment board according to last| of municipality or cantonment
preceding census board
More than 10,00o upto 1lakh 2 kms.
More than 1lakh upto10 lakhs 6 kms.
More than 10 lakhs 8kms.
Capital Gain
Short Term Capital Gain (STCG) Long Term Capital Gain (LTCG)
On transfer of On transfer of
STCA means a capital asset held by an LTCA means a capital asset held by an
assessee for not more than 36 months assessee for more than 36 months
immedialy preceding the date of its transfer. immedialy preceding the date of its transfer.
1) Listed securities
1) Unlisted securities
2) Units of UTI 2) Land or Building or Both
3)Unit of equity oriented fund
4) Zero Coupon Bond Land or Building or Both (Exception):
() Transferred upto 31.3.2017 =
Note: Assets used for business or profession, 36 Months
on which depreciation is allowed on the basis (iü) Transferred on or after 1.4.2017 =
of WDV method are treated as STCA. 24 Months
Example :Mr. Apurchased house on 1.7.17 for Rs. 5,00,000, he made improvement expenses in July
17 Rs. 2,00,000. This house was sold for Rs. 12,00,000 on 1.1.2019. He paid commission 2% on sale
value. Calculate capital gain.
Solution: Total holding period is 18 months, hence it is Short Term Capital Asset.
Full value of consideration 12,00,000
Net consideration is less Net consideration is more All assets are sold and net
consideration is less