CAPITAL GAINS

Capital Asset
Property of any kind including movable, immovable,
tangible, intangible assets
Except:
Any stock in trade, consumable stores, etc.
Personal effects (movable) except property including apparel and
furniture meant for personal use
Agricultural land in rural areas
Jewellery, paintings, gold, ornaments, etc. even if for
personal use, treated as capital asset
Transfer
Transfer includes sale, exchange or relinquishment of asset or
extinguishment of rights/compulsory acquisition
Doesnt include will

Capital assets by duration:

Long term >36 months (land-building: 24 months)
Short term- not more than 36 months
Certain assets
Shares, securities (debentures, govt securities), units of mutual
funds, zero coupon bonds
Period of holding 12 months
Rights shares, bonus shares
No indexation for bonds, debentures, depreciable assets.
Exemption of LTCG on shares, units of equity oriented mutual
funds 10 (38)
Calculation of capital gains
Full value of consideration
Less: transfer expenses
cost of acquisition*
cost of improvement*
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Less: Exemptions
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Net Capital Gains
Cost inflation index
CII for FY 16-17: 1125,
New CII: 2001-02: 100; 2017-18: 272
SI. No. Financial Year(FY) Cost Inflation Index
1 2001-02 100
2 2002-03 105
3 2003-04 109
4 2004-05 113
5 2005-06 117
6 2006-07 122
7 2007-08 129
8 2008-09 137
9 2009-10 148
10 2010-11 167
11 2011-12 184
12 2012-13 200
13 2013-14 220
14 2014-15 240
15 2015-16 254
16 2016-17 264
17 2017-18 272
Cost of Improvement
Capital expenditure
For additions/improvement to capital asset
Expenditure to increase value of capital asset
Tax on capital gains

Rates of tax
LTCG: @20%*
STCG (shares, units): @ 15%*
STCG (others): as per any other source of income
Exemptions
Sec 54: House property
Indl, HUF
Long term asset ( House property) transferred
Another property purchased/constructed
Time limits/CGAS
Amount of CG to be invested
New property to be held for atleast 3 years
 Sec 54EC: Specified Bonds
Any person
Transfer of any long term capital asset
Invest in specified asset within 6 months
Specified assets include bonds issued by NHAI and REC- 3 years
Upto Rs. 50 lakhs in one FY
Capital Gains to be invested
 Sec 54F
Indl, HUF
Transfer of any long term capital asset except residential house
Purchase/construct house within time limit
Should not own more than one house other than new house on date of
transfer
Net consideration to be invested
Hold new house for 3 years
Exemptions (contd.)
Section 54GB: Transfer of residential property
Any indl or HUF
Transfer of long term residential property on or after 1.4.2012
Buys equity shares in eligible company
Amt. to be invested- net consideration
Eligible company buys new plant and machinery (hold 5 years) within one
year of purchase of shares
Shares should be acquired by due date of filing return (hold for 5 years)
Eligible co. New SME of which at least 50% shares need to be bought
 Long term capital gains tax- no deduction u/s 80C to 80U, allow for
tax slabs.
Example 1
Mrs. Gupta sells her jewellery for Rs.1.2 cr on 3.6.17. She purchased it
on 4.9.04 for Rs. 36 lakhs. Of the proceeds, she buys a house on
3.4.17 for Rs. 40 lakhs. She did not own any house other than the
new one on the date of sale of jewellery. Find out the capital gains tax
payable by her.
Example 2
Mr. Mehta had bought a house in April 1993 for Rs. 6 lakhs, which he
sold on 1.7.2017 for Rs. 1.3 crores. The fair value of the house as on
1.4.2001 is Rs. 38 lakhs. He had spent Rs. 3 lakhs for improvements in
August 2009. He invests in a new house on 8.8.2017 to the extent of
Rs. 65 lakhs. Find out the capital gains tax payable by him.