INCOME FROM CAPITAL

GAINS

SUBMITTED TO : NAVDEEP KOUR

TAXATION LAW

SUBMITTED BY : GOURAV SETHI

17001266 BA.LLB 9th SEMESTER
 CAPITAL GAIN

The term capital gain refers to the increase in the value of capital asset when
it is sold put simply a capital gain occurs when you sell an asset for more than
what you
Originally paid for it. Almost any type of asset you own is a capital asset
whether
That’s a type of investment {like a stock bond , or real estate} or something
purchased for personal use. Capital gains are realized when you sell an asset
by taking the subtracting the original purchase prices from the sale price . The
Internal revenue service {IRS} taxes individual on capital gains in certain
circumstances
 BASIC OF CHARGE

Profit or gain arising from the transfer of capital assets during previous year Is
chargeable under the head capital gains if following conditions are fulfilled.
 Their should be capital assets.
 Their should be transfer of capital assets.
 Transfer should take place in previous year.
 Their should be profit or gains.
 CAPITAL ASSET U/S.2{14}
“Capital asset” means property of any kind held by an assessee whether or not Connected
with his business or profession but does not include following -
 Any stock -in-trade consumable stores or raw materials held for the purpose of
His business or profession;
 Personal effects that is to say movable property {including wearing apparel and
Furniture} held for personal use by the assessee or any member of his family dependent on
him, but excluded –
o Jewellery
o Drawings
o Painting
o Sculpture or
o Any work of arts.
Agriculture land in India provided that is not situated a} in any
area within the
Territorial jurisdiction of a municipality or a cantonment board
having a population
Of 10,000 or more ; or b} in any notified area .
 THERE MUST BE A CAPITAL ASSET
{S.2{14}

 Capital asset is defined to means property of any kind held by the assessee
Whether or not connected with his business or profession .
 Property may be tangible or intangible
 CAPITAL ASSETS MUST BE
TRANSFERRED {S.2{47}

The sale , exchange or relinquishment of the asset;

 The extinguishment of any rights therein;
Conversion of capital assets into stock in trade
The compulsory acquisition of any capital assets by the government
  Distribution of capital asset on total or
partial partition of Hindu undivided
family.
Transfer of capital asset under a gift or
TRANSACTIONS will or an irrevocable trust.
 Transfer of capital asset by a company
WHICH DO NOT to its 100 percent subsidiary company.
CONSTITUTE Transfer of capital asset by a company
TRANSFER {SECTION to its 100 percent holding company.
47} Transfer of capital asset in a scheme of
amalgamation
Transfer of capital asset by a demerged
company to the resulting company.
  Transfer of any work of art,
archeological, scientific or art
collection
Book, manuscript, drawing, painting,
or print, to government/university
NOT TO BE National museum / national art
CONSIDERED AS gallery / national archives or any
TRANSFER other
Notified public institution / museum
 Conversion of bonds or
debenture, debenture – stock or
deposit
Certificate in any form of a
company into shares or debenture
TYPE OF CAPITAL ASSETS

There are two type of capital assets

Shorts term capital gains: it means a capital
assets held by an assesse for
Not more than 36 months immediately prior
to its date of transfer tax is calculated
As per income tax Act.
Long term capital gains: a assets is not a
short term capital gain is long term capital
gains. 20% of taxable.
 MEANING

 Full value consideration: it means what the transferor or is

entitled to receive As consideration for the sale of the property as is
this value may be in cash or in kind i.e. , in exchange for an asset.
Cost of acquisition it is the price which the assessee has paid or
the amount which the assessee has incurred for acquiring the
property/assets.
 Cost of improvement it is the capital expenditure incurred by an
assessee in making any addition/improvements to the capital asset.
  ICOA: cost of acquisition
*cost of the year in which
asset is transferred.
Cost inflation index of the
first year in which asset was
INDEXED COST OF first hold by the
ACQUISITION Assessee or cost inflation index
of the year beginning on 1 April
1981 {which every year.
INDEXED COST OF INVESTMENT

ICOI : cost of acquisition * inflation index of

the year in which asset is transferred.
 Cost of inflation index of the year which
improvement took place.
  Section 54 capital arising from transfer
of residential house.
Section 54B capital arising from the
transfer of land used agricultural
purpose.
Section 54D capital gains on
CAPITAL GAINS EXEMPT compulsory acquisition of land and
building forming part of industrial
FROM TAX undertaking.
Section 54EC capital gains not to be
charged on investment in certain bonds.
Section 54f capital gains on transfer of
a long term capital asset other than a
house property.
  Section 54ED capital gains on transfer of
certain listed securities/ units not
To be charged to tax in certain cases.
Section 54G capital gains on transfer
CONTI….. Of assets in case of shifting of industrial
Undertaking from urban area.
 Section 54GA capital gains on transfer
Of assets in case shifting of industrial
undertaking from urban area to any special
economic zones.
THANK YOU…